In the American Jobs Act, President Obama reiterated his call for a national infrastructure bank, building on bipartisan legislation introduced in March by Sens. John Kerry (D-Mass.), Kay Bailey Hutchison (R-Tex.) and Mark Warner (D-Va.). The media are awash with calls to pass legislation creating a government bank to support private-sector investment in projects that would revitalize our domestic infrastructure, which most experts agree is in disrepair. At the same time, Washington is desperately searching for tools to stimulate a struggling economy.
Yet even if the president’s proposal were enacted tomorrow, it would be years before such a new bank would be fully operational. While Congress and the administration debate the appropriate means of financing infrastructure, there is a way to begin financing projects and creating jobs today.
The Export-Import Bank of the United States, a self-funded government corporation that carries the full faith and credit of the United States, has been financing multibillion-dollar infrastructure projects and creating American jobs for more than 75 years. Why haven’t you heard of the bank? Because it finances these projects in Jakarta, Santo Domingo and Sofia, instead of in Chicago, Dallas and Boston.
The bank — known to many in Washington as the Ex-Im Bank — creates American jobs by financing U.S. exports when commercial financing is not available or when its support is necessary to level the playing field with foreign subsidized exports. The bank has underwritten and financed large projects involving the export of American products for projects such as the development of a toll road in Romania, an airport in Ecuador and a pipeline in Peru, to name just a few. Its loan-loss history over 75 years hovers at less than 2 percent. After years of watching the bank turn a profit for taxpayers, Congress passed legislation in 2007 that enabled the bank to fund its own loan-loss reserve and operations through the fees it charges borrowers, rather than through an annual congressional appropriation. Effectively, its operations since then have cost taxpayers nothing, with its earnings going to the U.S. Treasury’s general account.
Despite its name, as a matter of policy the Export-Import Bank finances only U.S. exports. The singularity of that mission and the bank’s apolitical approach have helped it build a bipartisan base of support in Congress. Yet the bank could do much more — and has the legal authority to do so. The bank’s congressional mandate gives it broad authority to operate “a general banking business,” meaning the institution can develop innovative financing solutions that combine public and private capital while protecting the taxpayer. A newly expanded Export-Import Bank could facilitate private-sector investment in projects such as repairing roads and bridges, modernizing the energy grid, and maintaining our dams and levees — creating jobs while rebuilding the country.
Many of those pushing for an infrastructure bank say that public-private partnerships are part of the solution. This basic concept combines private capital with some form of public support to finance large projects. That is the Export-Import Bank’s bread and butter. Put another way, the United States already has a bank that knows how to balance investor return with lender (i.e., taxpayer) protection — often a major stumbling block to public-private deals.
The Export-Import Bank also has in place the internal decision-making, credit and operational functions to execute a new, non-political mandate regarding domestic infrastructure finance. The bank is governed by a bipartisan board of directors, all presidential appointees confirmed by the Senate. It is overseen by a presidentially appointed inspector general and by the Senate Banking Committee, the House Financial Services Committee and appropriators in both houses of Congress.
Not only would adding domestic infrastructure projects to the bank’s mandate avoid the inevitable delay that would occur should Congress pass legislation creating a national infrastructure bank, but the federal government’s most recent attempt to create a government lender to finance large projects — the Energy Department loan guarantee program — has fallen far below expectations.
If the federal government is to play a role in addressing the country’s serious infrastructure needs, policymakers should decide whether they want to make a difference now. They can broaden the Export-Import Bank mission and put the bank to work in prudently but aggressively financing domestic infrastructure projects while Congress and the administration consider whether to create a new federal agency, or they can allow our infrastructure to further deteriorate while that debate takes place. The president should ask Congress simply to resolve to encourage Ex-Im to act now. This green light is all that’s needed to begin rebuilding America and creating jobs.
Howard Schweitzer, the first chief operating officer of the Treasury Department’s Troubled Assets Relief Program, was senior vice president and general counsel of the Export-Import Bank of the United States from 2005 to 2008. Mark L. Alderman was a member of the Obama-Biden presidential transition team. They are principals in Cozen O’Connor Public Strategies. Evan Bayh, a former U.S. senator from Indiana, is a senior adviser to Apollo Global Management.