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H.R. 597 (114th): Export-Import Bank Reform and Reauthorization Act of 2015


House Democrats and a portion of the Republican House majority teamed up last week to win an important battle in the fight to bring back the Export-Import bank, a quasi-governmental agency that provides subsidies to foreign companies buying American goods.

On Monday, October, 26, 2015, the bipartisan coalition successfully used a rare procedural maneuver to call up legislation reauthorizing the agency to the House floor for consideration. The maneuver, known as a “motion to discharge,” technically discharged a “rule” from the Rules Committee that establishes terms the bill will be debated under. The final vote count on the discharge was 246–177, with all House Democrats voting in favor along with 62 Republicans.

The rule and then the bill itself were then passed on Tuesday, 313–118, sending it to the Senate, which had passed a similar measure in July.

The maneuver essentially bypassed Financial Services Committee Chairman Jeb Hensarling (R-TX), who opposes the bank and has prevented his committee from advancing reauthorization legislation to the House floor.

The move to discharge the legislation out of committee was spearheaded by Rep. Steve Fincher (R-TN), and it is the first successful use of a discharge petition since 2002, when it was used by a bipartisan coalition for advancing the McCain-Feingold campaign finance reform bill in the House. Fincher’s petition was signed by a majority of House Democrats and 42 House Republicans, and it reached its target number of 218 signatures (representing a majority of House members) on October 9, just hours after it was officially filed.

The Export-Import bank is a government corporation that, from 1934 until July 2015, subsidized foreign purchases of U.S. goods through special financing, loan guarantees, and insurance that would otherwise be unavailable from private lenders. In recent years the bulk of its subsidies have gone to foreign companies and governments purchasing equipment from just a few large U.S. companies, including Boeing, Caterpillar, and General Electric.

For years the bank had been a target of the left, but recently conservatives have been the lead critics of the bank, calling it a prime example of collusion between the government and private industry that they believe unfairly distorts the market. Hensarling has called the bank “crony capitalism,” and others have derided it as “The Bank of Boeing.” On July 1, 2015, after months of debate among Hill Republicans, authorization for the Export-Import bank to engage in new business was allowed to officially sunset.

How the Ex-Im Bank Would be Reformed

Fincher’s bill would reauthorize the bank until September 30, 2019, and it includes a number of reforms to how the bank operates, including the following:

  • Reducing the maximum authorized amount of outstanding loans from $140 billion to $130 billion
  • Requiring the bank to hold a larger amount in their reserves for covering potential losses.
  • Increasing the loan support amount that would trigger a requirement for the bank to publicly release an environmental impact statement on the purchase being financed from $10 million to $25 million.
  • Establishing term limits for the President of the Bank. Banning the bank from discriminating applications for support based on the sector, industry, or business that the application concerns.
  • Establishing an Office of Ethics within the bank to oversee ethics issues.
  • Establishing a Chief Risk Officer and a Risk Management Committee to help assess, manage, and mitigate risks that the bank may be exposed to.

What’s Next

The reauthorization legislation still has to pass through the Senate in order to become law and actually reopen the bank for business. Unfortunately for Export-Import Bank supporters, Senate Majority Leader Mitch McConnell (R-KY), who controls which bills get considered on the floor, is not in favor of renewing the bank’s charter.

On Thursday, Sen. Maria Cantwell (D-WA) attempted to bring the House’s reauthorization bill up for immediate passage by unanimous consent, but she was blocked by McConnell.

However, if somehow there is a vote on reauthorization — possibly in the form of an amendment to other legislation — it’s likely that it could pass. When the Senate voted on an Export-Import reauthorization bill back in July, as an amendment to the highway bill that never ended up becoming law, it passed with a filibuster-proof 64 votes.

Last updated Nov 5, 2015. View all GovTrack summaries.

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Oct 27, 2015.


Export-Import Bank Reform and Reauthorization Act of 2015

TITLE I--TAXPAYER PROTECTION PROVISIONS AND INCREASED ACCOUNTABILITY

(Sec. 101) This bill amends the Export-Import Bank Act of 1945 to set at $135 billion, for each of FY2015-FY2019, the authorized aggregate amount of loans, guarantees, and insurance the Export-Import Bank may have outstanding at any time.

If the rate at which borrowing entities are in default on a payment obligation (default rate) is 2% or more for a quarter, the Bank may not exceed the amount of loans, guarantees, and insurance outstanding on the last day of that quarter until the default rate becomes less than 2%.

(Sec. 102) The Bank shall build to and hold in reserve, to protect against future losses, at least 5% of its aggregate amount of disbursed and outstanding loans, guarantees, and insurance.

(Sec. 103) This bill amends the Export-Import Bank Reauthorization Act of 2012 (EIBRA) to require the Government Accountability Office's quadrennial review of the adequacy of the design and effectiveness of the Bank's fraud controls to include review of the Bank's compliance with these controls.

(Sec. 104) An Office of Ethics is established within the Bank to recommend administrative actions to establish or enforce standards of official conduct.

(Sec. 105) A Chief Risk Officer of the Bank is established to oversee all issues relating to risk within the Bank.

(Sec. 106) A Risk Management Committee is also established to:

oversee periodic stress testing on the entire Bank portfolio and the monitoring of industry, geographic, and obligor exposure levels; and review all required reports on the Bank's default rate. (Sec. 107) The Bank's Inspector General shall conduct an audit or evaluation of the Bank's portfolio risk management procedures, including its implementation of the duties assigned to the Chief Risk Officer.

(Sec. 108) The Bank may establish a pilot program under which it may enter into contracts and other arrangements to share risks associated with its provision of guarantees, insurance, or credit, or participation in the extension of credit.

The aggregate amount of liability the Bank may transfer through risk-sharing under a contract or other arrangement may not exceed $1 billion, nor a total of $10 billion during a fiscal year.

TITLE II--PROMOTION OF SMALL BUSINESS EXPORTS

(Sec. 201) This bill directs the Bank to:

increase from 20% to 25% of its lending authority the amount made available to finance direct exports by small business concerns, and include in its annual report to Congress a report on its programs for U.S. businesses with less than $250 million in annual sales. TITLE III--MODERNIZATION OF OPERATIONS

(Sec. 301) This bill requires the Bank to implement policies to accept electronic payments and transaction documents.

(Sec. 302) The Bank's authority to use a portion of its surplus to update its information technology systems shall extend through FY2019.

TITLE IV--GENERAL PROVISIONS

(Sec. 401) The bill reauthorizes through FY2019 the Bank, the Sub-Saharan Africa Advisory Committee, and authority for dual use exports (of nonlethal defense articles or services primarily for civilian use).

(Sec. 402) The principal amounts of medium-term financing by the Bank shall be limited to $25 million.

The bill increases from a minimum of $10 million to a minimum of $25 million the amounts of:

long-term loans or loan guarantees the Bank shall seek to ensure that U.S. insurance companies have a fair and open competitive opportunity to insure in connection with any transaction for which the loan or guarantee is provided, working capital export loans and guarantees to small businesses, and long-term support for projects to which certain procedures apply regarding the potential beneficial and adverse environmental effects of goods and services for which direct lending and guarantee support is requested. If the long-term support for projects subject to environmental effects consideration is less than $25 million, the minimum threshold shall be the one established pursuant to international agreements, including the Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence, as adopted by the Organisation for Economic Co-operation and Development Council on June 28, 2012, and the risk-management framework ("Equator Principles") adopted by financial institutions for determining, assessing, and managing environmental and social risk in projects.

TITLE V--OTHER MATTERS

(Sec. 501) This bill prohibits the Bank from:

denying an application for financing based solely on the industry, sector, or business that the application concerns; or promulgating or implementing policies that discriminate against an application based solely on the industry, sector, or business that the application concerns. These prohibitions apply only to applications for Bank financing for projects concerning the exploration, development, production, or export of energy sources and the generation or transmission of electrical power, or combined heat and power, regardless of the energy source involved.

(Sec. 502) The EIBRA is amended to require the President instead of the Department of the Treasury to initiate and pursue negotiations to end export credit financing.

The President shall propose to Congress a strategy to pursue with other major exporting countries, including Organisation for Economic Co-operation and Development (OECD) members and non-OECD members, to eliminate over a 10-year period subsidized export-financing programs, tied aid, export credits, and all other forms of government-supported export subsidies.

(Sec. 503) The Bank shall study the extent to which products it offers are available and used by companies that export information and communications technology services and related goods.