WASHINGTON (Reuters) - The House of Representatives on Wednesday voted to renew the U.S. Export-Import Bank’s charter until September 2014 and gradually raise its lending cap to $140 billion, disappointing conservative groups who want the nearly 80-year-old bank to die.
The bill now goes to the Senate, which is under pressure to approve the legislation before the Ex-Im Bank’s temporary charter expires on May 31.
President Barack Obama’s administration had pushed for a four-year renewal, but supports the House bill.
The 330-93 House vote is welcome news for U.S. aircraft manufacturer Boeing (BA.N), the bank’s biggest beneficiary. Other major customers include General Electric (GE.N), Caterpillar (CAT.N) and global engineering company KBR Inc (KBR.N).
Although all 93 “no” votes in the House came from Republicans, 147 party members backed the bill along with 183 Democrats. Passage of the measure was a rare bipartisan legislative success in a deeply divided Congress.
Senate Majority Leader Harry Reid has pledged to take up the House legislation and Senator Maria Cantwell, a Washington Democrat, called for quick Senate approval. A senior Democratic aide said the Senate may take up the bill as early as Thursday.
The government credit agency provides direct loans and other financing assistance to help U.S. exporters make sales in markets too risky for private lenders.
The overwhelming House vote “is a strong signal to U.S. exporters and to our competitors that we’re going to stand behind American workers and companies to make sure they can effectively compete and that financing is not going to be the reason for a lost sale,” Ex-Im Chairman Fred Hochberg told Reuters in an interview.
Bank officials have warned they are fast approaching their current $100 billion credit cap because of record demand for Ex-Im’s services the past several years.
House Republican leader Eric Cantor and second-ranking House Democrat Steny Hoyer struck a deal late last week to renew the bank’s charter until September 2014, ending months of uncertainty over the institution’s future.
Cantor said on the House floor he was “no fan of government subsidies” embodied in the bank’s loans. But shutting down the bank would amount to “unilateral disarmament” since other government credit agencies in China, Europe and elsewhere would continue to operate, he said.
“For the first time, with this bill, it will be U.S. policy to initiate and pursue negotiations to end government export subsidies,” Cantor said, referring to instructions for the Treasury Department contained in the bill.
Hoyer and other lawmakers from both parties stressed the job-creating benefits of renewing the bank’s charter.
“In 2011, finances from the Export-Import Bank helped create nearly 300,000 jobs at 3,600 private companies across the United States,” Hoyer said.
Conservative groups, such as Club for Growth, have questioned the need for the bank and raised concern about potential taxpayer losses as its loan volume swells.
“This was no compromise,” Club for Growth spokesman Barney Keller said, confirming the group opposed the Cantor-Hoyer deal. “Obama wanted to increase the lending cap by 40 percent and the Republicans are giving it to him.”
Sallie James, a trade policy analyst at the free market Cato Institute, said she was also not swayed by the deal. “It’s not the job of the federal government to be providing loans to companies, especially some of the most profitable companies in America,” she said.
The bill would immediately increase the bank’s lending cap to $120 billion through September.
That would rise to $140 billion in equal increments over the following two years, as long as loan defaults remain below 2 percent and the bank meets other conditions.
Many small manufacturers also depend on the bank and say they have faced potential lost sales while lawmakers deliberate over whether to renew it.
“The ongoing turmoil over Ex-Im Bank has caused great instability for small exporters and is negatively impacting our ability to grow or even maintain international business,” said David Ickert, vice president of finance for Texas-based Air Tractor, an agricultural aircraft manufacturer.
Meanwhile, Delta Air Lines has complained it was hurt by the bank’s lending to foreign competitors such as Air India at rates lower than the Atlantic-based carrier could get for itself.
In a nod to Delta’s concerns, the bill directs the U.S. Treasury Department to pursue trade talks aimed reducing and then eliminating government export subsidies.
Hochberg said that goal was consistent with the Obama administration’s desire to only provide “export financing when it’s really necessary. At the same time, we’re not going to unilaterally disarm just because of purist view.”
The bill also requires the bank to give interested parties an opportunity to comment on any transaction over $100 million to try to ensure that U.S. companies are not placed at a competitive disadvantage by a particular sale.
Additional reporting by Tom Ferraro; editing by Vicki Allen and Todd Eastham