On June 31, Congress, led by House Financial Services Committee Chairman Jeb Hensarling (R-TX), allowed the authorization of the U.S. Export-Import bank to expire without any vote. As previously reported, the future of the Ex-Im Bank has been at risk since Tea Party Republicans, especially members of the House Republican Study Committee, targeted the bank as a wasteful government program.
Following the expiration of its charter, the bank will remain open, but only for limited functions. It will not be able to issue any new loans, but will continue to service its current $110 billion portfolio of loans until they expire. The expiration for some of these loans is 18 years away. Bank operations (as opposed to its loan activities) are funded through the normal federal appropriation process, allowing it to service these loans for as long as it receives the necessary budget appropriations. The bank’s current operations, like the rest of the federal government, are funded through September 31, 2015. It is expected that the bank’s operating budget will be funded for fiscal year 2016 under the normal appropriations process, but given the politically charged environment around the bank, nothing is certain.
While the future of the bank seems bleak, resurrection is possible. Sixty-five Senators appear to support reauthorizing the bank, but have not been given the opportunity to vote on a reauthorization bill. Senate Majority Leader Mitch McConnell (R-KY) has promised a vote on reauthorization, perhaps before the end of the July. There will likely be efforts this week to attach the reauthorization to the “must pass” legislation highway funding bill, which would make it harder for the House to vote against it.
However, even if the Senate passes a reauthorization, passage in the House of Representatives is less likely. Ninety-six House Republicans publically oppose the bill. It is expected that a significant majority of the 170 members of the Republican Study Committee would also vote against reauthorization if pushed.
In a positive for bank supporters, 240 Members, including almost all Democrats, have supported reauthorization at one time or another, but the various reauthorization vehicles have significant differences, including some that would include harsh reforms of the bank. It is unclear if enough Democrats and Republicans can band together in the House to overcome the current opposition. An important indicator: only 60 House Republicans supported the latest reform and reauthorization package and only three Republicans have joined that bill as a co-sponsor since it was introduced in January.
Also of note, Speaker of the House Boehner (R-OH) has promised Chairman Hensarling an open amendment process in the event the Senate sends over a reauthorization bill. Applied, Hensarling may be able to work out a compromise amendment to the Senate bill that would reauthorize the bank, but impose major reform on its operation. The Senate would then be forced to accept these changes or let the bank close. Possible reforms include a limit on loans to large businesses and removal of the policy against providing loans for coal projects. Both large exporters and environmentalist Democrats would have problems supporting these amendments.
This fight has also pitted powerful political lobbies traditionally aligned with the Republican party against each other. For example, while pro-business groups such as the U.S. Chamber of Commerce and the National Association of Manufacturers have lobbied for reauthorizations, Team Party groups such as the Koch Brothers-backed Americans for Prosperity and the Club for Growth have come out aggressively against reauthorization. The Club for Growth has even run advertisements against Republicans that have supported the bank. This fight has also divided Republican presidential candidates, with Sens. Marco Rubio (R-FL) and Ted Cruz (R-TX) arguing that the bank should be closed and Sen. Lindsey Graham (R-SC) leading the group of Senators arguing for a reauthorization vote in July.
The coming weeks with provide more indication if the Ex-Im bank has a life after death. However, in the meantime, the practical consequences are real. American exporters are now cut off from a key source of financing, which makes their goods potentially less competitive in foreign markets.