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What’s Happening
EX-IM BANK CHARTER RENEWAL NEARS
House, Senate Staffs Tackle Details
The Ex-Im legal charter is getting closer to renewal, with key House and Senate panels adopting separate bills that are being merged by committee staffs.
A possible scenario is for the full Senate to pass a bill, and for the House to adopt the Senate measure. Both bills extend the Bank's charter for four years, through September 30, 2015.
Both also raise Ex-Im's operating ceiling, but in different amounts. The Bank's current ceiling for outstanding loans, guarantees and insurance is $100 billion. The Senate would boost that to $140 billion, the House to $160 billion.
Both bills propose changes in Ex-Im U.S. content rules, the most controversial part of the agency's operations. They are consistently criticized by exporters, the Bank's Advisory Committee, and even Ex-Im itself in its annual Competitiveness Report (See column 2).
Neither measure grapples with other controversies, such as the challenge of China's massive export finance programs, or the Ex-Im economic impact regs, which require a review of the effect of Bank transactions on U.S. industry sectors.
Congress wants tighter Ex-Im risk controls, even though the Bank has steadily reduced its risk-taking in recent years (it quantifies risk levels each year in the annual reports). And even though Ex-Im stresses that it makes a profit, costs taxpayers nothing.
The House bill (HR2072) requires government audits on a sample of Ex-Im transactions, regarding underwriting and due diligence, and monitoring of the Bank's default rates.
The Senate bill (S1547) requires the Government Accountability Office (Congressional "watchdog") to study the Bank's finances and their risk to the taxpayers. That includes risk management, loss reserves, exposure in each product.
And Congress want to see Ex-Im information technology upgraded. This is a long-running issue, the Bank uses multiple systems that produce fragmentation.
The House bill sets aside $20 million of the annual surplus for that purpose, the Senate bill calls for modernization.
The Ex-Im Advisory Committee would be upgraded. Both bills require the Bank to be guided by its recommendations (which has not been the case), including the panel's views on domestic content.
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HOUSE BILL WOULD CHANGE
EX-IM U.S. CONTENT RULES
The charter bill offers Congressional input for the first time into the Ex-Im U.S. content regs.
It throws the burden onto Ex-Im, however, sets up priorities the Bank must translate into content rules. Top priority: to sustain U.S. jobs through Ex-Im operations.
Among the elements to consider: (1) the needs of different industry sectors, (2) what rival export credit agencies offer.
And (3) what the Ex-Im Advisory Committee and the General Accountability Office (the Congress "watchdog" unit) have recommended.
Plus, Ex-Im has to calculate the broad consequences of its new rules for the U.S. manufacturing workforce.
The House bill lets Ex-Im create separate guidelines for goods and services, and for small business. It may continue to have separate rules for different payment terms and different financing programs.
A schedule of action is created: 60 days after bill passage, the Bank will tell the public it intends to create new content rules, and offer
60 days for comment.
Then the new rules go to Congress for a 30-day review, after which they go into effect.
Ex-Im's Inspector General will report to Congress in a year on how effectively the Bank has followed the charter law's priorities. |
