Full Text of the WSJ article: Ex-Im Bank Faces
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Posted On: 04/28/2016 3:27:10 PM
Full Text of the WSJ article:
Ex-Im Bank Faces New Hurdle as Senator Blocks Board Nominees
Standoff prevents U.S. trade bank from arranging financing for deals of more than $10 million
By Nick Timiraos
Updated April 28, 2016 1:53 p.m. ET
27 COMMENTS
A single U.S. senator is blocking the U.S. Export-Import Bank from operating at full strength despite strong bipartisan backing from lawmakers last year to end a monthslong shutdown of the federal agency.
Now the bank is unable to approve financing deals of more than $10 million because of the opposition of Sen. Richard Shelby (R., Ala.), the chairman of the Senate Banking Committee, creating new headaches for customers of large industrial manufacturers such as Boeing Co.
Sen. Richard Shelby of Alabama, chairman of the Senate Banking Committee, has said he won’t advance any Ex-Im Bank board nominations because he is ideologically opposed to the bank. ENLARGE
Sen. Richard Shelby of Alabama, chairman of the Senate Banking Committee, has said he won’t advance any Ex-Im Bank board nominations because he is ideologically opposed to the bank. Photo: Andrew Harrer/Bloomberg News
The spat illustrates the backlash big businesses are facing in Washington with a Republican Party that has grown more populist. It is also the latest in a series of moves by Senate Republicans to shape policy using the nominations process.
Congress ended a five-month impasse last December when large majorities in both chambers voted to renew the lapsed charter of the Ex-Im Bank, which finances U.S. exports. House Republicans had prevented Congress from voting on a reauthorization measure before the charter expired last July.
The latest challenge has cropped up in the Senate, which must submit and approve nominees for the bank’s board. With three of its five board seats unfilled, the Ex-Im Bank lacks the quorum required to approve deals of more than $10 million.
Mr. Shelby has said he won’t advance any Ex-Im Bank board nominations because he is ideologically opposed to the bank, which he says is “corporate welfare.” Senate Majority Leader Mitch McConnell (R., Ky.) has said over the past year that despite his own opposition to the bank, he wouldn’t use the board nomination process to strangle the agency.
Critics say the 82-year-old agency puts taxpayers at risk of losing money to finance sales of planes, satellites and industrial equipment that should be left to the private sector. Supporters of the agency say it keeps U.S. firms on a level playing field against foreign competitions that enjoy similar support from their governments.
Some business groups had hoped Mr. Shelby would move nominations after fending off a primary challenge in his Senate re-election bid last month. Mr. Shelby’s term as committee chairman ends next January regardless of which party has control of the Senate.
The standoff is causing heartburn for exporters of heavy machinery and other industrial equipment. In the fiscal year ended last September, the bank authorized 140 deals of more than $10 million. While that represents just 5% of all transactions approved, it is 80% of all transactions by dollar volume.
Almost half of those transactions were with firms buying products from Boeing. Other companies that exported goods to Ex-Im Bank customers on deals that needed board approval last year included General Electric Co. , Lockheed Martin Corp. ’s Sikorsky unit, and Acrow Corp. of America, a bridge manufacturer.
“The long-term absence of Ex-Im financing poses a real threat to America’s competitiveness and ability to grow manufacturing jobs,” said Kate Bernard, a Boeing spokeswoman.
Despite winning strong backing in Congress last year, the bank “remains closed for major export deals because of obstructionist tactics by a handful of bank opponents,” she said.
As last year’s Ex-Im Bank temporary closure dragged on, GE said it would add around 500 jobs overseas rather than in the U.S. so it could secure export-credit agency backing in other countries to field competitive bids for industrial projects.
Ex-Im Bank data showed the agency approved a big spate of deals in the days before its charter lapsed on July 1. While loan approvals are disclosed in a public database, applications aren’t. It is possible the burst of approvals followed a flood of applications as businesses braced for the bank’s closure.
The bank approved more than $2 billion in loan approvals during the week before its authorization lapsed, the most for a single week all year and around one-sixth of all financing approved last year. The deals included a $1.5 billion financing package for Mexico’s state-oil firm Petróleos Mexicanos, or Pemex, and another $600 million in financing for four different airlines buying products from Boeing.
Altogether, the bank approved 74 applications on the day before its financing lapse last June, matching the highest single-day approvals total in records dating to October 2006. Most of those deals weren’t large enough to require board approval and instead were authorized by private lenders that are approved to accept loans on behalf of Ex-Im Bank.
The bank’s critics say those approvals warrant further scrutiny. “Lawmakers need to take a close look at how Ex-Im was operating just days before it expired and determine whether tax dollars were unnecessarily put at risk,” said Andy Koenig, a policy advisor at Freedom Partners, a conservative political nonprofit that opposes the bank.
It isn’t unusual to see a spate of approvals ahead of key funding deadlines for the bank. The bank approved $6.4 billion in transactions on the last two days of May 2012, when it faced another funding battle in Congress. President Barack Obama signed a two-year extension of the agency’s charter on May 30, 2012.
The Ex-Im Bank saw its business decline nearly 40% last year due to the temporary shutdown, to around $12.4 billion in financing agreements during the year ended September. The bank said it sent nearly $432 million to the U.S. Treasury earned in interest and fees, down from $675 million in the prior year.
Mr. Shelby’s position on moving nominees appears to put him at odds with Senate Majority Leader Mr. McConnell, who, though he voted against reauthorizing the bank, has said he wouldn’t use the nomination process to cripple it.
“I’m not a supporter of Ex-Im Bank, but 65 senators were, and I would hope the committee would report out a nominee,” Mr. McConnell said earlier this month. “And if the committee reports out a nominee I’ll be happy to take it up.”
Mr. Shelby has withheld votes on other nominations. He has said he won’t advance two nominees to become governors of the Federal Reserve, for example, until the White House names a vice chairman for supervision at the central bank. Senate Republicans have also promised to not hold hearings or a vote on the nomination of Judge Merrick Garland to fill a Supreme Court vacancy.
On the recommendation of Senate Republican leaders, the White House earlier this year nominated Mark McWatters, a former staffer for House Financial Services Committee Chairman Jeb Hensarling (R., Texas), to fill one open board seat, which would give the bank the quorum it needs to approve larger deals.
—Siobhan Hughes contributed to this article.
Write to Nick Timiraos at nick.timiraos@wsj.com
Ex-Im Bank Faces New Hurdle as Senator Blocks Board Nominees
Standoff prevents U.S. trade bank from arranging financing for deals of more than $10 million
By Nick Timiraos
Updated April 28, 2016 1:53 p.m. ET
27 COMMENTS
A single U.S. senator is blocking the U.S. Export-Import Bank from operating at full strength despite strong bipartisan backing from lawmakers last year to end a monthslong shutdown of the federal agency.
Now the bank is unable to approve financing deals of more than $10 million because of the opposition of Sen. Richard Shelby (R., Ala.), the chairman of the Senate Banking Committee, creating new headaches for customers of large industrial manufacturers such as Boeing Co.
Sen. Richard Shelby of Alabama, chairman of the Senate Banking Committee, has said he won’t advance any Ex-Im Bank board nominations because he is ideologically opposed to the bank. ENLARGE
Sen. Richard Shelby of Alabama, chairman of the Senate Banking Committee, has said he won’t advance any Ex-Im Bank board nominations because he is ideologically opposed to the bank. Photo: Andrew Harrer/Bloomberg News
The spat illustrates the backlash big businesses are facing in Washington with a Republican Party that has grown more populist. It is also the latest in a series of moves by Senate Republicans to shape policy using the nominations process.
Congress ended a five-month impasse last December when large majorities in both chambers voted to renew the lapsed charter of the Ex-Im Bank, which finances U.S. exports. House Republicans had prevented Congress from voting on a reauthorization measure before the charter expired last July.
The latest challenge has cropped up in the Senate, which must submit and approve nominees for the bank’s board. With three of its five board seats unfilled, the Ex-Im Bank lacks the quorum required to approve deals of more than $10 million.
Mr. Shelby has said he won’t advance any Ex-Im Bank board nominations because he is ideologically opposed to the bank, which he says is “corporate welfare.” Senate Majority Leader Mitch McConnell (R., Ky.) has said over the past year that despite his own opposition to the bank, he wouldn’t use the board nomination process to strangle the agency.
Critics say the 82-year-old agency puts taxpayers at risk of losing money to finance sales of planes, satellites and industrial equipment that should be left to the private sector. Supporters of the agency say it keeps U.S. firms on a level playing field against foreign competitions that enjoy similar support from their governments.
Some business groups had hoped Mr. Shelby would move nominations after fending off a primary challenge in his Senate re-election bid last month. Mr. Shelby’s term as committee chairman ends next January regardless of which party has control of the Senate.
The standoff is causing heartburn for exporters of heavy machinery and other industrial equipment. In the fiscal year ended last September, the bank authorized 140 deals of more than $10 million. While that represents just 5% of all transactions approved, it is 80% of all transactions by dollar volume.
Almost half of those transactions were with firms buying products from Boeing. Other companies that exported goods to Ex-Im Bank customers on deals that needed board approval last year included General Electric Co. , Lockheed Martin Corp. ’s Sikorsky unit, and Acrow Corp. of America, a bridge manufacturer.
“The long-term absence of Ex-Im financing poses a real threat to America’s competitiveness and ability to grow manufacturing jobs,” said Kate Bernard, a Boeing spokeswoman.
Despite winning strong backing in Congress last year, the bank “remains closed for major export deals because of obstructionist tactics by a handful of bank opponents,” she said.
As last year’s Ex-Im Bank temporary closure dragged on, GE said it would add around 500 jobs overseas rather than in the U.S. so it could secure export-credit agency backing in other countries to field competitive bids for industrial projects.
Ex-Im Bank data showed the agency approved a big spate of deals in the days before its charter lapsed on July 1. While loan approvals are disclosed in a public database, applications aren’t. It is possible the burst of approvals followed a flood of applications as businesses braced for the bank’s closure.
The bank approved more than $2 billion in loan approvals during the week before its authorization lapsed, the most for a single week all year and around one-sixth of all financing approved last year. The deals included a $1.5 billion financing package for Mexico’s state-oil firm Petróleos Mexicanos, or Pemex, and another $600 million in financing for four different airlines buying products from Boeing.
Altogether, the bank approved 74 applications on the day before its financing lapse last June, matching the highest single-day approvals total in records dating to October 2006. Most of those deals weren’t large enough to require board approval and instead were authorized by private lenders that are approved to accept loans on behalf of Ex-Im Bank.
The bank’s critics say those approvals warrant further scrutiny. “Lawmakers need to take a close look at how Ex-Im was operating just days before it expired and determine whether tax dollars were unnecessarily put at risk,” said Andy Koenig, a policy advisor at Freedom Partners, a conservative political nonprofit that opposes the bank.
It isn’t unusual to see a spate of approvals ahead of key funding deadlines for the bank. The bank approved $6.4 billion in transactions on the last two days of May 2012, when it faced another funding battle in Congress. President Barack Obama signed a two-year extension of the agency’s charter on May 30, 2012.
The Ex-Im Bank saw its business decline nearly 40% last year due to the temporary shutdown, to around $12.4 billion in financing agreements during the year ended September. The bank said it sent nearly $432 million to the U.S. Treasury earned in interest and fees, down from $675 million in the prior year.
Mr. Shelby’s position on moving nominees appears to put him at odds with Senate Majority Leader Mr. McConnell, who, though he voted against reauthorizing the bank, has said he wouldn’t use the nomination process to cripple it.
“I’m not a supporter of Ex-Im Bank, but 65 senators were, and I would hope the committee would report out a nominee,” Mr. McConnell said earlier this month. “And if the committee reports out a nominee I’ll be happy to take it up.”
Mr. Shelby has withheld votes on other nominations. He has said he won’t advance two nominees to become governors of the Federal Reserve, for example, until the White House names a vice chairman for supervision at the central bank. Senate Republicans have also promised to not hold hearings or a vote on the nomination of Judge Merrick Garland to fill a Supreme Court vacancy.
On the recommendation of Senate Republican leaders, the White House earlier this year nominated Mark McWatters, a former staffer for House Financial Services Committee Chairman Jeb Hensarling (R., Texas), to fill one open board seat, which would give the bank the quorum it needs to approve larger deals.
—Siobhan Hughes contributed to this article.
Write to Nick Timiraos at nick.timiraos@wsj.com
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