On Wednesday, the U.S. Senate confirmed three of President Trump’s nominees to serve on the board of the U.S. Export-Import Bank (Ex-Im). The appointments bring to four the total number of bank directors, providing it with a quorum for the first time since late 2015.
The lack of a quorum has limited the bank’s financing authority to loans and guarantees for amounts less than $10 million dollars. In 2014, the last year during which the bank’s board had a quorum, the Ex-Im Bank approved 3,746 authorizations for a total value of $20.5 billion. Of that dollar total, $18.52 billion comprised guarantees, insurance and working capital, and $1.95 billion was authorized as direct loans. The bank said the 2014 authorizations created or sustained 164,000 U.S. jobs.
The remaining hurdle is the Ex-Im Bank’s charter, which was last renewed in July 2015 and must be renewed by September 30 of this year. That won’t be easy. If the charter is not renewed, the appointments announced Wednesday become essentially meaningless.
The bank has been the target of conservative Republican Senators for years. They argue that the bank is nothing but corporate welfare and a prime example of crony capitalism. Yet, the Trump administration and many Senate Democrats and Republicans support the Ex-Im Bank, saying that it raises exports, creates jobs and boosts U.S. competitiveness with China.
However one views the bank’s mission, it is true that a large portion of the bank’s effort was focused on major exporters like Boeing Co. (NYSE: BA), General Electric Co. (NYSE: GE) and Caterpillar Inc. (NYSE: CAT) that sell their hugely expensive products to countries for which the Ex-Im Bank provides loan guarantees. In 2014, for example, Boeing received more than $6.1 billion in loan guarantees out of a total authorization of $10.79 billion. That sort of dominance earned the Ex-Im Bank the derisive nickname of the “Bank of Boeing.”
Ex-Im Bank’s chair and acting president, Jeffrey D. Gerrish, commented on Wednesday’s Senate vote: “[The bank] has nearly $40 billion worth of export deals in the pipeline that can move forward in support of hundreds of thousands of American jobs. … [U.S.] exporters again have a fighting chance to win export sales on the fair basis of quality and price instead of on the availability of government-backed financing.”
Will the Ex-Im Bank survive what is sure to be another assault on its existence? Is the Trump administration’s support going to be enough to keep Republicans in line? Will Office of Management and Budget director Mick Mulvaney, a long-time and fierce opponent of the bank, go against the wishes of his boss and try to torpedo a charter renewal? Will opposition from environmental groups that condemn the bank’s support for fossil fuel projects lead to a coalition with climate change deniers? Stay tuned.