Congress continues to debate the reauthorization of the Export-Import Bank of the United States (Ex-Im Bank or Bank), which expired June 30, 2015. While the Ex-Im Bank continues to service financing approved prior to expiration, the Bank’s expiration prevents it from considering any applications for new financing.
In a rare weekend session on July 26, the Senate ended a filibuster on a 67-26 vote to include the reauthorization of the Ex-Im Bank in a six-year highway and infrastructure bill, which the House did not consider before August recess. But even if Congress ultimately reauthorizes the Ex-Im Bank over conservative opposition, the Ex-Im Bank faces another challenge: the Bank’s board of directors currently lacks a quorum after two directors’ terms expired July 20, leaving three total vacancies on the five-member board. Reauthorization and quorum present challenges for businesses seeking financing from the Ex-Im Bank, especially for amounts greater than US$10 million.
Even if Congress reauthorizes the Ex-Im Bank, the Senate has another means to limit the Bank: failure to confirm nominees to fill three vacancies on the Bank’s board. The board already had one vacancy at the start of the year, and two other members’ terms expired January 20. The board’s charter allowed the two members to stay on another six months after the end of their terms, but the charter forced those members to leave the board on July 20. Charter Sec. 3(c)(8)(E)(ii).
The Senate has not considered replacements to fill the vacancies. Under the Ex-Im Bank Charter, not more than three directors may be members of the same political party. Charter Sec. 3(c)(2). The President has nominated a Democrat to the board, but the Senate will not take up the Democratic nominee until a Republican is also nominated. Typically, the Chairman of the Senate Banking Committee, Richard Shelby (R-Ala.), proposes a Republican nominee to Senate Majority Leader Mitch McConnell (R-Ky.), who in turn makes the recommendation to President Obama. But Chairman Shelby has opposed the reauthorization of the Ex-Im Bank, and has not made efforts to propose a Republican nominee.
The vacancies on the board of directors are significant because the board of directors must vote to approve any transaction by the Bank over US$10 million. See Charter Sec. 3(g)(3). But the board also needs three members for a quorum. Charter Sec. 3(c)(6). Without a quorum, the board cannot hold a meeting to approve transactions. Applicants for Ex-Im Bank financing, including companies like Boeing and General Electric, routinely apply for financing greater than US$10 million, which constitutes more than 80 percent of total Ex-Im Bank financing. Thus the Senate can seriously constrain Ex-Im Bank operations, even if Congress reauthorizes the Bank as part of must-pass legislation, by refusing to confirm nominees to the board of directors.
Prospects for Reauthorization
Although the Senate sent its six-year highway bill, including a provision to reauthorize the Ex-Im Bank, to the House on July 26, the House left for recess through Labor Day without considering the bill. Conservatives in the House, led by Majority Leader McCarthy, have expressed opposition both to a long-term highway bill and the reauthorization of the Ex-Im Bank, in spite of its support in the Senate. Instead, the House forced the Senate to take up a short-term, three-month extension of the highway bill through October 29 by passing the bill and leaving for recess. Senate Majority Leader McConnell said that he would not attach the reauthorization of the Ex-Im Bank to a short-term highway bill. President Obama signed the three-month highway bill into law on July 31 while castigating Congress for failing to pass a long-term highway bill and to reauthorize the Ex-Im Bank.
Instead, prospects for reauthorization of the Ex-Im Bank turn on attaching reauthorization to another piece of must-pass legislation. Possible vehicles include a funding measure to prevent a government shutdown (due September 30), continued highway and infrastructure funding (due October 29), or continuing appropriations after the end of the calendar year (the last scheduled day of the legislative session is December 18, with funding to expire December 31).
According to press accounts, major companies like Boeing and General Electric that use financing through the Ex-Im Bank have stepped up their efforts to urge Congress to reauthorize, most recently by denying campaign contributions to Majority Leader McCarthy. The Bank continues to face steep opposition from a cross-section of House conservatives.