U.S. exporters that use government financing for overseas sales can plan with more certainty after President Barack Obama signs legislation on Wednesday to renew the U.S. Export-Import Bank's charter, the bank's president said.
"This just takes away a big cloud of doubt for a lot of American businesses," Ex-Im Bank President Fred Hochberg said in an interview, adding that the bank's board of directors will be considering "north of $6.5 billion" of financing deals on Wednesday and Thursday.
The bank's current charter expires on Thursday, prompting Hochberg to joke that Obama's signing on Wednesday amounts to a "just-in-time reauthorization" of the nearly 80-year-old government-run bank.
The bill, passed by Congress earlier this month on broadly bipartisan votes, extends the bank's charter through September 2014. It increases the bank's lending cap to $120 billion through the end of September, from $100 billion currently.
The cap rises to $130 billion in the 2013 budget year beginning in October and to $140 billion in budget year 2014, assuming default rates remain low.
What is usually a routine effort to reauthorize the bank's charter became more politically charged this time around after many conservative Republicans questioned whether the government should be involved in helped financing exports.
The bank's customers include big U.S. companies such as Boeing, Caterpillar and GE, as well as many small and medium-sized firms that rely on government backing to make sales in markets where private financing is not available.
The protracted debate may have cost U.S. exporters some sales as potential customers turned to other suppliers in a better position to arrange financing, Hochberg said.
At the same time, the bank has had to manage its loan portfolio to avoid breaching its lending cap.
Assuming all the deals before the board are approved on Wednesday and Thursday, the bank's total portfolio would be "in the $99 billion range. So within $1 billion (of the current $100 billion cap). I don't know how much closer I could have gotten," Hochberg said with a laugh.
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