On December 4, 2015, President Obama signed the highway funding bill which also reauthorizes the Export-Import Bank (EXIM Bank) through FY 2019. This represents a hard-fought victory for President Obama, Secretary Pritzker, the Administration, and the U.S. exporting community over Congressional critics who successfully permitted EXIM Bank’s authority to lapse on July 1st. However, the lack of a quorum on EXIM’s Board of Directors means that the Bank remains unable to approve large financing requests until a quorum is restored.
BACKGROUND
The highway funding bill reauthorizes EXIM Bank through FY 2019, lowers its exposure cap from $140 billion to $135 billion (current exposure stood at about $107 billion in June), and raises the Bank’s small business requirement from 20 percent to 25 percent of overall financing. The bill also contains other reforms including higher reserve requirements, creation of a pilot risk-sharing program with commercial banks, and strengthened mandates to negotiate export credit rules with non-OECD member countries (which began in 2012 and in which ITA’s Office of Finance and Insurance Industries actively participates) and an end to all export credit financing within 10 years.
With some $9 billion of financing applications in the pipeline when EXIM’s Charter expired (some of which may now be moot), the Bank can now resume processing and accept new applications. However, with three of five Board positions vacant, EXIM Bank will be unable to approve transactions requiring Board action (i.e., those over $10 million) until additional members are confirmed. Former Director Pat Loui has been re-nominated, but may not be considered without at least one nomination for the Republican slots on the bipartisan Board.
Due to the lapse, EXIM Bank’s FY 2015 financing activity dropped sharply to $17.7 billion of exports supported from $27.5 million of U.S. exports supported last year. Still, EXIM estimates that it supported 100,000 U.S. jobs, met its mandate of 20 percent of financing for small businesses, and returned more than $430 million to the Treasury in FY 2015.
Click here to access the EXIM Bank Chairman’s letter and the Bank’s Reauthorization FAQs.