BOEING AND EX-IM BANK FIND SUPPORT IN FEDERAL COURT AS CONGRESSIONAL REAUTHORIZATION LOOMS
April 30, 2015
With its controversial reauthorization scheduled to be brought before Congress this June, the Export-Import Bank of the United States recently found support for its loan programs to foreign airlines in federal district court in Washington, D.C.
On March 30, 2015, the U.S. District Court for the District of Columbia rejected a lawsuit by Delta Air Lines and others challenging Export-Import Bank loan guarantees for the purchase of Boeing aircraft. According to Delta, those loan guarantees were harmful in that they effectively subsidized foreign airlines to the detriment of U.S. carriers.
This most recent legal challenge is particularly timely as the Bank’s reauthorization, due June 30, 2015, is being hotly debated in Washington. Opponents accuse the Bank of “crony capitalism” – supporting Boeing to the detriment of domestic airlines. As they observe, the Bank issued $6.1 billion in loan guarantees to Boeing in 2014 alone. Critics also observe that only 11% of the Bank’s loans and guarantees were necessary because the risks were too great for private financial institutions. Finally, some claim that the Bank’s apparent financial independence is an accounting mirage, and that it actually is operating at a significant deficit.
Supporters of the Export-Import Bank, on the other hand, note the many benefits conferred on the public and U.S. businesses by the Bank, at no cost to American taxpayers. While a sizeable portion of the Bank’s activities do support Boeing, some argue that this is merely a counterbalance to subsidies enjoyed by foreign aircraft manufacturers. Many small U.S. businesses also enjoy support from the Bank, with roughly 90% of its authorizations and $5.1 billion in funds going to those small businesses in 2014. Not only has the bank been self-sustaining since 2008, funding itself entirely from customer receipts, but it has generated close to $7 billion in excess revenues for the U.S. Treasury since 1992.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622) or Drew Derco (dderco@eckertseamans.com, 202-659-6665).