Shakespeare’s straitlaced and starchy Malvolio, while being pranked by Maria, Sir Toby, and others, read the following that lead to his future humiliation, “some achieve greatness, and some have greatness thrust upon them.” Perhaps The Export-Import Bank of the United States (EXIM) can relate somewhat by feeling that “some have [change] thrust upon them.”
This article does not seek to debate the virtues or evils of EXIM as most opinions are very entrenched and unlikely to change; rather it explores some of the effects of the ongoing fight.
Shakespeare’s straitlaced and starchy Malvolio, while being pranked by Maria, Sir Toby, and others, read the following that lead to his future humiliation, “some achieve greatness, and some have greatness thrust upon them.” Perhaps The Export-Import Bank of the United States (EXIM) can relate somewhat by feeling that “some have [change] thrust upon them.” This article does not seek to debate the virtues or evils of EXIM as most opinions are very entrenched and unlikely to change; rather it explores some of the effects of the ongoing fight.
Most are well familiar with the drama surrounding last year’s reauthorization of EXIM. Briefly restated: Congressional conservatives and some of their leadership, the Koch brothers and several large companies (i.e. Delta Airlines) were pitted against the majority of members of congress, the Obama Administration, small exporters and other large companies (i.e. GE, Boeing, Caterpillar) to close down EXIM, which was portrayed as corporate welfare, “crony capitalism’, etc.. The theater being played out in Congressional halls and the press was a comedy for many but to exporters, financiers and especially EXIM’s staff it seemed more of a tragedy.
A heavy toll is taken anytime a country, company or institution feels like it us under attack and fighting for its survival. The full effects of this agency being under siege are uncertain and have yet to fully unfold. Below are some of the typical effects that should be considered:
Uncertainty and decreased morale: Studies have shown that increased uncertainty at work increases the psychological strain on the workers. Over the course of many months the experts repeatedly miscalculated the likelihood of reauthorization. With each failed attempt or delay to vote, Congress increased the uncertainty and psychological strain on EXIM staff, particularly those with the least access to current information.
Increased workload: In June 2015, the final lead up to the failure to reauthorize EXIM staff was likely severely overworked. $4.6 billion or over 36% of the 2015 authorizations occurred in the last 30 days prior.
Apprehension to make decisions: The Bank’s critics spent much time, effort, and money to identify real or perceived past mistakes. When institutions are heavily scrutinized and feel at threat they often enter into a bunker mentality and become much more cautious. However, it often leads to decision making paralysis. Even the routine decisions are slowed to turtle pass because they are now overly scrutinized for any possible perceived problems.
Brain drain: The combination of being overworked, uncertainty, and fearful of possible ramifications of making a decision that later be criticized lead to brain drain – a condition where some of the best talent head for the exits and can kill the effectiveness of an institution. The work that EXIM does to assist U.S. exporters is very specialized and can take years of training. Since the number of EXIM staff is relatively small as compared to other government agencies and the nature of the work is unique, the risk of brain drain to the agency is amplified.
The Power of One
A recent Wall Street Journal article introduces the effect that one U.S. Senator can have on the lending activities of EXIM. The Bank’s board needs a quorum to approve any deals greater than $10 million and currently it has three of its five seats vacant. As the chairman of one committee is ideologically opposed to the bank, he is refusing to allow any nominees to be approved. So for better or worse, even though the majority of both congressional chambers voted for EXIM’s reauthorization, its ability to provide insurance or extend loans has been severely reduced. (See the full article http://www.wsj.com/articles/ex-im-bank-faces-new-hurdle-in-congress-over-board-nominees-1461835801)
A quick analysis of EXIM’s Authorizations helps to illustrate how this particular inaction may affect the Bank’s activities. Over the last five full fiscal years that EXIM was open, it averaged almost $19 billion in authorizations for transactions over $10 million and about $4 billion for transactions less than $10 million. The amounts in 2015 were limited due to its restricted operations from July to December. Thus until more board members are approved, EXIM’s new authorizations will be severely decreased. However, it should be noted that since the larger transactions equate to only 5 percent of the total the workload of EXIM staff will remain largely the same. Therefore the operating costs per dollar authorized may climb sharply.
It was a bit amusing to view the saga of EXIM Bank and its critics through the lens of Shakespeare’s Twelfth Night. It may have even been fun for some to watch the drama play out the past two years in the halls of Congress. Most people and institutions can benefit at times from being reminded that they are not as grand as they may think as was Malvolio with the forged letter and his yellow stockings. However, some actions have much more lasting damage. For example: putting Malvolio in a dark room and telling him that he is going crazy or trying to kill off a government agency drip by drip.
For a broader opinion on the value of EXIM, I recommend the opinion piece John McAdams wrote for Deseret News when the issue first started to get hot. Click here.