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What’s Happening
EX-IM BANK LIVES WITH TEMPORARY CHARTER
Key Congress Panels Want Quick 4-Year Extension
The Ex-Im legal charter was renewed late in 2011 on a temporary basis, through May 31, 2012, but Congress did not increase its operating ceiling beyond the $100 billion existing cap.
That could be a problem if action on a full extension drags on to April or May, when the Bank may hit the ceiling.
In that case it would be unable to approve new financing. Ex-Im is understood to have used over $90 billion of its legal authority already, while continuing to approve a high level of transactions.
The key Congressional panels -- the House Financial Services and Senate Banking Committees -- agreed on a four-year extension bill with a $135 billion ceiling late in 2011, but were unable to get the bill to a floor vote.
One problem it faces is opposition from Congressional anti-spending sentiment. That's why the key committees settled for the $135 billion cap, considering it a political necessity. The Senate panel had wanted a $140 billion ceiling, the House unit $160 billion.
Aircraft financing has also created a problem. U.S. airlines have mounted a vigorous effort to limit the Bank's support for aircraft sales to overseas carriers that have investment grade credit ratings.
The U.S. carriers say they face a competitive disadvantage since Ex-Im offers more attractive financing for foreign carriers than they can obtain in the USA.
The squabble has helped to delay action on the Ex-Im charter. The air carriers want new rules in air sector financing included in the renewal bill.
They even went to court to block an Air India deal that Ex-Im approved in 2011, providing $1.3 billion in loan guarantees. A U.S. federal court judge in
mid-January 2012, however, denied the request.
It's a big issue for Ex-Im. Aircraft loans and guarantees are a major part of its portfolio. At the end of Fiscal 2011, they were 48% of outstanding exposure.
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EX-IM CHARTER BILL CHANGES
DOMESTIC CONTENT RULES
The charter renewal bill offers Congressional input for the first time into the Ex-Im U.S. content regs.
It throws the burden onto Ex-Im, however, requiring the Bank to draft new rules that reflect today's competitive environment. The bill includes some guidelines for the updating.
Ex-Im has begun developing new rules, it is understood, but has to await passage of the charter extension bill before unveiling its approach. After passage, it will submit its draft of the rules to Congress.
EX-IM SMALL BIZ ACTIVITY HITS PEAK,
MISSES 20% MINIMUM REQUIREMENT
Ex-lm Bank chalked up $6 billion in 2011 finance for small business, a record high, but that was only 18.0% of total activity, less than the 20% share required in the agency's legal charter.
The small biz scorecard: $3.27 billion in credit insurance (2,649 transactions), $2.15 billion in working capital (522 deals), $613 million in guarantees and loans (76 transactions).
672 smaller firms used Ex-Im programs for the first time, while 1,345 small firm transactions involved less than $500,000.
Ex-Im added 12 lenders to its working capital roster. Eight received delegated authority, which upped the delegated lender group to 105.
The Bank added 20 brokers serving small biz, which raised its roster of active brokers to 80. The top five small biz brokers did over $800 million in smaller exporter authorizations.
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