Congress Fails to Renew OPIC

Aug 20, 2008

Congress has left for its summer recess without renewing the charter of the Overseas Private Investment Corporation (OPIC), a federal agency that has become a unique and powerful backer of smaller companies in international trade.

Unfortunately, OPIC’s authority to finance international transactions expired back in April. The expiration coupled with this latest Congressional delay has resulting in OPIC's inability to finance any new transactions. Ironically, OPIC had become one of the federal government’s signature success stories in helping smaller U.S. companies flourish in international trade.

Ten years ago, OPIC had no dedicated small-business underwriters or a small-business office. Its handful of small-business transactions had an annual value of $10 million or less. Today, most of OPIC’s underwriters work for the agency’s Small and Medium Enterprise Finance Department. About 90 percent of the agency’s transactions are with small and medium enterprises and the value of those transactions has soared to over $500 million annually.

Most recently, OPIC opened up a new network of loan originators to expand the agency’s reach across the country. It also created a new $100 million fund dedicated exclusively to underwriting international transactions by U.S. small businesses.

No other agency in Washington has done so much in so short a time to help finance American small businesses in international trade.

OPIC has done all this while meeting a series of challenges. The agency is required to carefully assess market risk in the emerging market economies where it is active and to avoid transactions that look too shaky. It must also ensure that each project it finances helps support economic development in the target country. It seeks projects that would help build up small businesses abroad and that are fully sustainable economically and environmentally. OPIC must weigh whether the project would otherwise be financed by the private sector, and if so, it must decline to participate. Furthermore, OPIC requires its funded companies to provide employment benefits in the U.S. as well as abroad.

OPIC has not only done all this, but done it at no net cost to American taxpayers. In fact, the agency returns money to the U.S. Treasury each year.

This year, OPIC’s charter renewal passed the relevant Congressional Committees by wide margins and was overwhelmingly approved by the U.S. House of Representatives.

In the Senate, however, the bill got tangled up in a series of mostly unrelated disputes about other issues that the Senate was considering. The Small Business Exporters Association, a council of NSBA, will work to ensure passage of reauthorizing language for OPIC, and urges the Senate's prompt action.