Ex-Im Reauthorization Process Begins

With just a few months remaining for Congress to reauthorize the Export-Import Bank of the U.S. (Ex-Im Bank), lawmakers are now in the process of holding oversight hearings and crafting draft legislation. The U.S. Senate Committee on Banking, Housing, and Urban Affairs recently held a hearing on Ex-Im Bank’s activities and challenges in the coming years. Meanwhile, House Financial Services Subcommittee on International Monetary Policy and Trade Chairman Gary Miller (R-Calif.) has begun circulating a discussion draft of his reauthorizing legislation.

Senate Hearing

The U.S. Senate Committee on Banking, Housing, and Urban Affairs held an oversight hearing last week. Led by Chairman Tim Johnson (D-S.D.) and Ranking Member Richard C. Shelby (R-Ala.), the committee’s hearing was the Senate’s first step toward crafting and enacting reauthorizing legislation for Ex-Im Bank which is set to expire at the end of FY 2011.

The key witness was Ex-Im Chairman and President Fred P. Hochberg who focused a great deal on small- and mid-sized exporters throughout his testimony.

Hochberg reported that Ex-Im is meeting its statutory goal of providing at least 20 percent of its financing to small businesses. In FY 2008, Ex-Im Bank’s total small-business transactions  were $3.2 billion, for FY 2010, that jumped to $5.1 billion—a 58 percent increase. In that same period, total Ex-Im Bank transactions grew from $14.4 billion in FY 2008 to $24.5 billion in FY 2010.

Given their rapid growth, Hochberg warned that maintaining the 20 percent goal could be difficult given Ex-Im Bank’s limited administrative budget and the fact that the 20 percent of funding that goes toward small businesses constitutes 85 percent of the overall transactions and therefore requires a good deal of staff time and resources.

House Draft

House Financial Services Subcommittee on International Monetary Policy and Trade Chairman Gary Miller (R-Calif.) is working on a discussion draft of the Ex-Im Bank reauthorization bill, provisionally entitled: “Securing American Jobs Through Exports Act of 2011.”  That draft has been circulated to a handful of stakeholders to provide input, including SBEA. While still a work in progress, the draft bill will:

  •  Reauthorize Ex-Im Bank for five years, from 2011 to 2015;
  • Increase Ex-Im Bank’s limits on outstanding loans, guarantees, and insurance to $160 billion over three years, up from the current limit of $100 billion;
  • Require Ex-Im Bank to establish guidelines on the goods and services allowable for Ex-Im Bank financing;
  • Allow Ex-Im Bank to use up to five percent of the surplus each fiscal year (not to exceed $20 million total) for the acquisition, installation, operation, and maintenance of  IT systems of the Bank;
  • Require Ex-Im Bank to calculate default rates every 60 days and provide a report to Congress within 45 days if such default rate exceeds 2 percent; and
  • Allow for the financing of non-lethal defense articles or services where the primary use will be for civilian purposes.

There are a number of challenges Ex-Im faces in coming years, many of which ought to be dealt with during the reauthorization process. For example, the 85 percent domestic content requirement, the MARAD cargo preference, and Tied Aid, and other policies that hamstring the competitiveness of the Bank.

SBEA is urging Congress to ensure small businesses are not left behind in reauthorization talks and legislation, and is urging that the 20 percent goal for small-business financing be maintained as-is, and not watered down by allowing indirect financing to be counted toward the total. Furthermore, SBEA supports continued integrity and autonomy of Ex-Im Bank’s small-business operations that are led by a senior vice president who reports directly to the President. Finally, SBEA believes that further decentralization of Ex-Im Bank’s operations will improve transparency and make the process more accessible.