Tuesday night at midnight, the 2014 reauthorization of the Export-Import Bank expires. The agency, under law, doesn’t evaporate immediately. Instead, per the law, Ex-Im enters “liquidation,” which is basically Chapter 7 bankruptcy.
Specifically, Ex-Im’s authorization allows it to continue to exist for one purpose: “exercising any of its functions subsequent to such date for purposes of orderly liquidation….”
Liquidation is Chapter 7 bankruptcy — which is exit, extinction. It is not Chapter 11 bankruptcy, which is what companies enter temporarily in order to reorganize and then come back. Ex-Im workers, when they return Wednesday morning, are supposed to be in the business of dismantling Ex-Im.
As I read it, that means Ex-Im is supposed to sell off the loans and guarantees on which it is currently sitting — not in a fire sale, but in an orderly fashion.
This isn’t a “lapse.” This is liquidation. I know many Ex-Im employees simply see this as a temporary lapse in lending authority, but that view is contrary to the law.
It will be interesting to see how Ex-Im officials follow the law.
Here is the full text of the relevant section of the law:
Export-Import Bank of the United States shall continue to exercise its functions in connection with and in furtherance of its objects and purposes until the close of business on September 30, 2014, but the provisions of this section shall not be construed as preventing the bank from acquiring obligations prior to such date which mature subsequent to such date or from assuming prior to such date liability as guarantor, endorser, or acceptor of obligations which mature subsequent to such date or from issuing, either prior or subsequent to such date, for purchase by the Secretary of the Treasury or any other purchasers, its notes, debentures, bonds, or other obligations which mature subsequent to such date or from continuing as a corporate agency of the United States and exercising any of its functions subsequent to such date for purposes of orderly liquidation, including the administration of its assets and the collection of any obligations held by the bank.
