Some questions and answers about Tuesday's expiration of the federal Export-Import Bank

Economic Indicators Associated Press

The Export-Import Bank expires Tuesday at midnight for the first time since the small federal agency was created during the Depression to help U.S. businesses export their products. Congress failed to renew the bank's charter because of opposition from Republicans who say it amounts to corporate welfare. However, the shutdown may end up being only temporary.

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Some questions and answers about the Export-Import Bank, and its future:

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Q: What does the Export-Import Bank do?

A: The federal Export-Import Bank's principal role is to guarantee commercial bank loans made to foreign businesses to buy U.S. products. That means U.S. taxpayers would pick up the tab if, say, a company in South America defaulted on a commercial bank loan it got to buy a Caterpillar tractor.

The Export-Import Bank also makes direct loans and provides export credit insurance to protect against losses to companies from non-repayment of loans.

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The bank says that last year it authorized $20 billion worth of transactions which supported $27.5 billion of U.S. exports and 164,000 U.S. jobs. And it says it has a default rate of less than 1 percent.

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Q: Why is the Export-Import Bank needed?

A: That's the question at the heart of the current debate in Congress.

Opponents, including conservative lawmakers, groups like the Heritage Foundation and the GOP's presidential candidates, say it isn't needed at all. They point out that the vast majority of U.S. exporting is conducted without government support. They argue that the Export-Import Bank primarily supports big businesses that don't really need the help, such as Boeing and GE. And they say the bank amounts to "crony capitalism" and the government picking winners and losers.

"Where is the fairness in giving Washington politicians and bureaucrats the power to pick who gets helped and who gets hurt?" asked GOP Rep. Jeb Hensarling of Texas, chairman of the House Financial Services Committee and a leading opponent of the bank.

But supporters like the U.S. Chamber of Commerce and National Association of Manufacturers say the Export-Import Bank plays a critical role in stepping in where commercial lenders can't. Government backing can be needed because of the huge amounts of money involved in big purchases such as aircraft, or to help U.S. companies protect against the risk of default from a little-known buyer in a foreign country.

Supporters also note that foreign competitors such as China have foreign credit agencies more generous than the Export-Import Bank, and so U.S. businesses would be at a competitive disadvantage without it.

"We ought to reauthorize the bank and provide certainty to businesses and their workers who depend on it to level the playing field against foreign competitors," said House Minority Whip Steny Hoyer, D-Md.

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Q: Whom does the Export-Import Bank help?

A: Opponents argue that the bank primarily helps big businesses — and that is true if you measure its spending in dollars. Of the $20.5 billion in financing and insurance authorized by the bank in 2014, just over $5 billion of that was for small business exporters, according to bank officials.

However, supporters note that if you count the number of transactions, many more small businesses are helped than big ones. It's just that the amounts spent on them are much smaller.

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Q: What will happen when the Export-Import Bank's charter expires?

A: The bank will lose its ability to make new loans when its charter expires Tuesday at midnight. However, it will stay in business to service outstanding loans. Supporters warn that even a short-term shutdown could disrupt some deals that are in the pipeline, but any impacts would likely go unnoticed by the vast majority of the public.

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Q: Why is Congress letting the Export-Import Bank's charter expire, and will lawmakers revive it?

A: Congress has renewed the Export-Import Bank's charter on a bipartisan basis with little controversy over the years. But recently, the obscure agency has become something of a conservative purity test, with tea party-backed lawmakers and groups attacking it and rallying fellow Republicans to defy the business community and turn against it. That's caused leading Republicans who once supported the bank, such as House Majority Leader Kevin McCarthy, R-Calif., to oppose it. The GOP's presidential candidates also have lined up against it. Amid that opposition, it was easier for congressional leaders to let the bank expire than to try to take action to renew it.

However, lawmakers of both parties say the bank commands enough support to pass Congress, and it looks like it could do just that in July. Supporters plan to try to attach it to must-pass highway legislation in the Senate, which could also get it through the House.

"Looks to me like they have the votes, and I'm going to give them the opportunity," Senate Majority Leader Mitch McConnell, R-Ky., told The Associated Press on Monday.

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Associated Press writer Laurie Kellman contributed to this report.