Export-Import Bank reauthorization delayed

— -- WASHINGTON - U.S. exporters and major airline carriers are fighting over reauthorization of a federal trade bank that plays a key role in President Obama's jobs plan, according to industry insiders and congressional records.

House Republican leaders, pushed by the major U.S. airlines, delayed a long-term reauthorization of the Export-Import Bank and a decision on whether to increase the bank's lending cap to $135 billion from the current limit of $100 billion before lawmakers headed home last month.

The bank, which guarantees loans from U.S. banks to foreign businesses that then buy U.S.-made products, approved $32.7 billion in loans last year but is quickly edging toward hitting its cap. The bank, which was founded in 1934 and returns a modest amount of revenue to the Treasury, has been praised by Obama as vital tool to his goal of doubling U.S. exports by 2015.

Officials from top exporting companies — including Boeing's James McNerney and General Electric's Jeffrey Immelt — warned House leaders in a letter last month that failure to increase the lending cap could lead the loss of thousands of U.S. jobs.

"The bank's work is at risk of grinding to a halt," said John Murphy, vice president of international affairs at the U.S. Chamber of Commerce, adding the bank is on track to max out in April or May.

But Airlines for America (AFA), the association that represents the leading U.S. air carriers, insists that Congress make fundamental changes to how the bank operates as part of any increase in the lending cap. The group argues that the bank finances loans to foreign carriers at favorable terms unavailable to domestic carriers, putting U.S. airlines at a competitive disadvantage.

Steve Lott, a spokesman for AFA, said the group wants Congress to make any increase in the bank's loan ceiling contingent on increasing transparency of aircraft financing transactions and a prohibition on loan guarantees for foreign airlines with investment grade credit ratings that would allow them to secure financing without the bank's help.

"We're pro-Boeing; we're in support of the president's initiative to double exports … but we're concerned with any market distortion that creates an unleveled playing field," Lott said.

In the past decade, the bank has provided more than $52 billion in loan guarantees to buy Boeing aircraft, Airlines for America says. Foreign airlines took delivery of 792 wide-body aircraft compared to 189 for U.S. airlines, according to AFA.

AFA also recently sued to stop the bank from delivering $1.3 billion in loan guarantees to Air India to buy Boeing aircraft. A federal judge in Washington is expected to rule today on a request to block the guarantees while he considers their legal challenge.

Boeing's backers say that such rule changes would help foreign competitors, such as Airbus, the European aircraft manufacturer.

"Our argument is that if you undermine the credibility and competitiveness of Ex-Im, you're not going to help the American carriers, you're going to help Airbus," said John Hardy, president of a Coalition for Employment through Exports, which counts Boeing as a member.