Ex-Im Bank: No Quorum, No Problem?
September 15, 2016 (IN10574)
Shayerah Ilias Akhtar
Shayerah Ilias Akhtar, Specialist in International Trade and Finance (firstname.lastname@example.org, 7-9253)
The Export-Import Bank (Ex-Im Bank) is operating on a limited basis despite a renewal of its general statutory charter
through FY2019 (P.L. 114-94, Division E, enacted December 4, 2015). The absence of a Board of Directors quorum
constrains Ex-Im Bank's ability to approve medium- and long-term export financing above $10 million. The Board's
status is of congressional interest because nominations to the Board are subject to Senate approval, and debate over it
relates to broader issues for Congress over Ex-Im Bank (see CRS In Focus IF10017, Export-Import Bank of the United
States (Ex-Im Bank)
, by Shayerah Ilias Akhtar).
Ex-Im Bank's Board of Directors consists of five voting members—the President of the Bank (who also serves as
Chairman of the Board), First Vice President (who also serves as Vice Chairman), and three additional directors—who
are appointed by the President of the United States with the advice and consent of the Senate. (The Secretary of
Commerce and U.S. Trade Representative are non-voting ex officio members.) No more than three voting directors can
be of any one political party. The Board's responsibilities include approving financing for U.S. exports. A Board quorum
is at least three directors (12 U.S.C.
635a(c)(6)), which Ex-Im Bank appears to interpret as three voting members.
Approval of Export Financing
Ex-Im Bank approves applications for export
financing through a number of routes.
According to Ex-Im Bank, the "Board
authorizes the Bank's financing either directly
or through delegated authority...." (
annual report, p. 31). The charter also explicitly
authorizes, for instance, Ex-Im Bank staff (12
U.S.C. §635a(g)(3)) and commercial banks (12
U.S.C. §635(b)(1)(E)(vii)(III)) to approve
transactions related to small businesses.
According to Ex-Im Bank, "[w]ithout a quorum, the Board of Directors cannot conduct any business including
considering applications for medium- and long-term transactions exceeding $10 million...." However, the lack of a
quorum, in Ex-Im Bank's view, does not appear to impact its authority to approve
below $10 million (and,
in specific circumstances, certain transactions above $10 million).
The Board had four voting members in
. On July 20, 2015, amid a lapse in Ex-Im Bank's general statutory charter
(July 1-December 3, 2015), two voting members' terms expired, leaving the Board with two voting members (
and Vice Chairman
) and below the three-member quorum threshold. On January 11, 2016, President Obama withdrew
his nomination of Patricia M. Loui-Schmicker to another term on the Board
; the nomination had been
March 16, 2015. Also
that same day
, the President nominated John Mark McWatters to be a Board member, but
further action has occurred in the Senate to consider the nomination.
The standoff regarding the nomination
relates to ongoing debate over Ex-Im Bank. Supporters contend that Ex-Im Bank
supports U.S. exports and jobs by filling gaps in private sector financing and helping U.S. exporters compete against
foreign companies backed by foreign export credit agencies (ECAs), and contributes financially to the U.S. Treasury.
Critics argue that Ex-Im Bank crowds out private sector activity, picks winners and losers, acts as "corporate welfare,"
and poses a risk to taxpayers.
In the 114th
Congress, both the pending House and Senate State-Foreign Operations FY2017 appropriations bills would
ease Ex-Im Bank's quorum requirement—allowing that, if a period occurs during which the Board's membership drops
to below three voting directors during October 1, 2016
through September 30, 2019, the entire membership of the Board
would constitute a quorum for that period. In the House, an amendment (Dent) on the quorum provision was approved
on July 12, 2016
by a voice vote and added to the House version of the appropriations bill (H.R. 5912
which was reported on July 15, 2016. The Senate version with the quorum provision (S. 3117
7034 (k) (15)) was
reported on June 29, 2016. The provision would renew a prior temporary exception (July 21-December 2, 1999) to the
quorum requirement enacted in law when vacancies on the Board reduced membership to two voting members in 1999
P.L. 106-46, §1(b)). Some Ex-Im Bank supporters favor such alternative approaches given the impasse over Board
disapprove of efforts to restore Ex-Im Bank's operations. Prospects for further action on these
proposals are unclear.
Impact of Board Vacancies
As of June 30, 2016, Ex-Im Bank reportedly had over
deals of more than
20 billion in the pipeline awaiting Board
approval pending a quorum. The
of transactions in prior years further illustrates the role of a quorum in
Bank activity. In each of FY2014 and FY2015, by dollar amount, two-thirds of all authorizations were
and one-third approved at non-Board levels. However, by total number of transactions, 2% were
and 98% were approved at non-Board levels. This divergence by amount and number is presumably due to the
composition of Ex-Im Bank's authorizations, which generally include a smaller number of high-value deals (often above
$10 million) involving larger exporters or large-scale infrastructure projects, and a larger number of lower-value deals
(less than $10 million) involving small business exporters.
Ex-Im Bank supporters claim that the lack of a quorum is costing $50 million
in export losses daily
, as well as
thousands of U.S. jobs—for both direct Ex-Im Bank users and companies in their supply chains.
argue that uncertainty surrounding the Board's status, coupled with the prior reauthorization lapse and sustained foreign
ECA competition, weakens Ex-Im Bank's international competitiveness. For instance, General Electric, a major Ex-Im
Bank user, announced in June an agreement in which France's ECA will provide export financing for gas turbine
combined cycle projects for countries such as Saudi Arabia, Mexico, and Brazil; GE, consequently, will invest €35
million to develop heavy duty gas turbine manufacturing capabilities in France. In contrast, critics contend that if the
Bank cannot be fully terminated, a constraint on its ability to support large-scale deals is a "second-best" option. They
also assert that large U.S. exporters' concerns about the Board vacancies validate their opposition to Ex-Im Bank as
corporate welfare." It is an open question whether, when, and how Ex-Im Bank may become fully operational again.