CBO Says Ex-Im Bank Could be Solvent, but Warns Of Uncertain Estimates
Should Congress match the President’s fiscal year 2015 budget request for the Export-Import (Ex-Im) Bank, the bank’s six largest credit programs would generate a negative or zero budgetary cost according to Fair Credit Reform Act methodology, the Congressional Budget Office (CBO) said in recent days (here). The CBO said its estimates could be understated, however, because they exclude the Ex-Im Bank’s administrative costs from subsidy cash flows. The CBO also cautioned that its methods used to assess risk premiums are not precise.
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House Financial Services Committee Chairman Jeb Hensarling, R-Texas, used that uncertainty to reiterate his criticism of the bank. “The Export-Import Bank and its supporters claim it makes money for taxpayers,” said Hensarling (here). “As I have said previously, the Export-Import Bank’s supposed profits are nothing more than an illusion. If the Export-Import Bank were to use fair-value accounting, as the CBO recommends, the Bank’s ledger would actually show a loss of money for the taxpayers -- not a profit.” But the bank would cost the U.S. $2 billion, using the fair-value evaluation approach, said the CBO. The bank is due to expire in a matter of months, and lawmakers are digging in for a fight over reauthorization (see 14052123).
Some critics of the bank also rallied behind the Hensarling rejection of the bank. "The CBO's findings are more evidence that Congress should let the Export-Import Bank expire on schedule in September," said Americans for Prosperity President Tim Phillips. "Ex-Im claims that it's not putting taxpayer dollars at risk, but it's clear that the accounting methods they've used to reach that conclusion are misleading and irresponsible."