By Emily Stephenson and Krista Hughes
WASHINGTON (Reuters) - Republican leaders in the House of Representatives on Tuesday proposed extending the U.S. Export-Import Bank's charter through June 30 next year, a Republican aide said on Tuesday, granting a temporary reprieve for the export lender.
The extension was included in a proposed bill to temporarily fund the U.S. government through Dec. 11 at current spending levels. The measure, announced by the House Appropriations Committee, could come up for a vote as early as Thursday..
Speaker John Boehner said earlier that Representative Jeb Hensarling, a key opponent of the bank, now "thinks a temporary extension of the Export-Import Bank is in order" - removing a key obstacle to the bank remaining open.
Hensarling, an influential Texas conservative who chairs the House Financial Services Committee, has been highly critical of the bank and has accused it of crony capitalism and favoring big business. He had proposed letting its mandate expire - a prospect worrying many in the business community.
An extension through mid-2015 - longer than the end-2014 time frame many had envisaged - would remove the threat of closure on Oct. 1, when the bank's current mandate runs out, and give businesses reliant on Ex-Im programs some breathing room.
It would not, however, completely resolve the heated political debate about the future of the bank, which underwrites loans and insures exports for U.S. companies and lends to foreign companies buying U.S. goods, ranging from Boeing planes to pickles and medical equipment made by small businesses.
Hensarling declined to answer questions after Tuesday morning's Republican caucus meeting, which was the first chance for lawmakers to check in with each other after a five-week summer recess that business lobbyists used to push the merits of the bank.
Congress has as little as two weeks left before it breaks for campaigning for the mid-term elections in November.
Tennessee Republican Stephen Fincher, a fellow conservative and member of Hensarling's committee, is finishing up a bill that would extend Ex-Im for five years. It would have reforms such as a review of fraud controls, a stronger ethics office, retaining earnings and requiring a report on privatizing the bank, according to a draft obtained by Reuters.
A spokeswoman for Fincher said he has not yet decided when to introduce the bill.
An extension would also need to be approved by the Democrat-led Senate, but most Democrats are in favor of renewal.
Ex-Im is "an important issue and I'm going to do everything I can to make sure that it doesn't go away," Senate Majority Leader Harry Reid told reporters.
Democratic Whip Steny Hoyer said he believed there was enough House support for a long term extension if Republicans - who control the House - allowed a vote.
"We believe the majority of the House of Representatives is for a longer term reauthorization of the Ex-Im Bank," he said.
But conservative groups said Republicans should simply let Ex-Im expire.
"By continuing to discuss Ex-Im in the context of the (funding bill), House Republicans are breathing life into the very shutdown narrative they are trying to avoid," said Dan Holler, communications director for Heritage Action for America.
Ex-Im's internal procedures as well as lending practices have come under scrutiny during the recent debate, after allegations that four officials were suspended or removed as investigators looked into charges of improper gifts and kickbacks.
A U.S. government watchdog said on Tuesday that the Ex-Im Bank needs to better document its lending processes and programs for preventing fraud.
The Government Accountability Office said that Ex-Im's underwriting manual should direct loan officers to make sure applicants do not have delinquent federal debt and call for assessments of collateral before certain loan guarantees are approved.
In a letter included with the GAO report, the Ex-Im Bank said it agreed with all of the recommendations.
(Additional reporting by Richard Cowan, and Amanda Becker; Editing by Bill Trott, Leslie Adler and Ken Wills)