As for the merits, Noah Smith on Bloomberg
Why on Earth would we want the government to finance trade deals that the public sector won’t touch? If the private sector won’t finance something, doesn’t that mean it isn’t worth financing?
Well, yes…if you believe that financial markets work perfectly in the absence of any government intervention. Do you believe that? I don’t.
In our finance system, investment decisions are (theoretically) made according to a corporation’s internal rate of return (how much money it will make off of the investment), and its cost of capital (how much it costs to finance the investment). If the prices of a company’s stocks and bonds fluctuate too much – and there is evidence they do – then the cost of capital will be wrong. And if company managers make decisions to maximize the short-term value of their own stock options, then the effect of financial markets on business investment decisions will be even farther from optimal.
In fact, a number of people claim that a malfunctioning finance industry is causing big problems with U.S. corporate governance. If that’s true, there’s a chance that the Export-Import Bank might not distort the economy very much after all.
So we should be very careful about swallowing the high-school-textbook case that Ex-Im distorts the economy by “picking winners.” The other case is that Ex-Im just isn’t fair – that it creates losers as well as winners. But that’s also true of free trade! The case for free trade is that it boosts the overall economy; if the Ex-Im Bank does the same, we should keep it.
Now I don’t actually know if the Ex-Im Bank is good for efficiency. The U.S.’s large and persistent trade deficits are a hint that perhaps not all is right with our market system. As a country we seem to be especially bad at exporting manufactured goods – exactly the thing that Ex-Im helps with. If we kill Ex-Im, there seems to be a real possibility that whatever is causing our trade deficit might get worse.