Export-Import Bank Reauthorization Debate

Export-Import Bank Reauthorization Debate

CRS Insights
Export-Import Bank Reauthorization Debate
Shayerah Ilias Akhtar, Specialist in International Trade and Finance (siliasakhtar@crs.loc.gov, 7-9253)
August 18, 2014 (IN10097)
The Export-Import Bank of the United States (Ex-Im Bank or the Bank), a wholly owned federal
government corporation, is the official export credit agency (ECA) of the U.S. government. Its mission
is to assist in the financing of U.S. exports of goods and services to support U.S. employment. On a
demand-driven basis, it seeks to provide financing when the private sector is unwilling, or unable, to
undertake alone such financing at terms commercially viable for exporters; and/or to meet foreign
competition by countering government-backed financing offered by foreign countries to their
companies. Its statutory charter (Export-Import Bank Act of 1945, as amended, 12 U.S.C. §635 et seq.)
expires on September 30, 2014 (P.L. 112-122), meaning that the agency's authority to enter into new
obligations generally would cease and a wind-down of operations would be required. (This issue is
distinct from an "authorization of appropriations" expiring, which would not, in and of itself, terminate
such authority to operate.) Congress is considering whether to renew Ex-Im Bank's authority and, if so,
for how long and under what terms. See CRS Report R43671, Export-Import Bank Reauthorization:
Frequently Asked Questions, and CRS In Focus IF00021, Export-Import Bank (Ex-Im Bank)
Reauthorization (In Focus).
Background
Congressional and stakeholder views on Ex-Im Bank vary. Proponents contend that the Bank supports
U.S. exports and jobs by addressing shortfalls in private sector financing and helping U.S. exporters
compete against foreign companies backed by their governments' ECAs. Critics contend that it crowds
out private sector activity, picks winners and losers through its support, operates as a form of
corporate welfare, and poses a risk to taxpayers.
While Congress has renewed Ex-Im Bank's authority many times, the reauthorization issue is subject to
increasing congressional debate—coinciding with questions over the role of the U.S. government in
supporting exports, the appropriate size and scope of the government, and other issues. In April 2014,
the Obama Administration proposed draft legislation including a five-year extension of the Bank's
authority and an increase to $160 billion by FY2018 in its exposure cap.
Possible Scenarios for Authorization Status
Congress could take a range of approaches related to Ex-Im Bank. In the 113th Congress, proposals
have included, for example, a largely "clean reauthorization" of the Bank (H.R. 4950); reauthorization
with various reforms (S. 2709 and a discussion draft of a bill); and termination of authority (H.R. 2263
and S. 1102). Possible options are summarized below.
"Clean Renewal" or Renewal with Limited Changes
Options for a renewal of Ex-Im Bank's charter include a "clean reauthorization" extending its
termination date, or reauthorization with limited changes, such as revising its exposure cap ($140
billion for FY2014). Supporters of such options argue that they facilitate Ex-Im Bank's current role in
federal export promotion, while opponents contend that they neglect to address fundamental concerns
about the Bank.
Shorter extensions of authority in the past arguably have given Congress the opportunity to weigh in on
Ex-Im Bank operations more frequently through the lawmaking process, while a longer extension could
enhance the Bank's long-term planning ability and provide more assurance to clients of its viability. The
most recent extension, in 2012, was for about two years and four months (P.L. 112-122). Recent
longer-term extensions have been around four to five years, and going further back in the Bank's

history, as long as approximately six to seven years. Congress also has extended its authority on a
short-term basis, including through provisions in continuing resolutions. (See CRS Report R43405,
FY2014 Continuing Resolutions: Overview of Components, by Jessica Tollestrup.)
Renewal with Substantive Reforms
Renewal of Ex-Im Bank's charter could include more substantive reforms, such as to its authorities,
policies, and risk management practices. Such reforms could be motivated by a range of reasons,
including enhancing Ex-Im Bank's ability to fill in gaps in private sector financing and to offset
competition from foreign ECAs; limiting the size and scope of its activities and its exposure to U.S.
taxpayers; and furthering efforts to eliminate all ECA activity internationally. Proposed reforms may
raise, among other things, issues regarding the extent to which such changes would balance Ex-Im
Bank's core mission to boost U.S. exports and jobs with supporting other U.S. policy interests.
Lapse in Authority
Options for a lapse in authority include taking no legislative action or passing legislation, for instance,
with specific parameters for a wind-down in Ex-Im Bank's functions. The Bank's charter (12 U.S.C.
§635f) generally terminates its functions on September 30, 2014, but permits it to acquire obligations
and liabilities prior to this date that mature after this date; issue, prior or subsequent to this date,
bonds or other debts that mature after this date; and continue as a corporate entity and exercise
certain functions for an "orderly liquidation." According to Ex-Im Bank, generally speaking, if its
authority expires, no new commitments (including new credit and insurance transactions) could be
approved by its Board of Directors or under delegated authority, but prior obligations (including
disbursements on already-approved final commitments) would continue. The Bank would continue to
make expenditures in its operations (including salary and rent), while developing a plan for orderly
liquidation. However, the specifics of a liquidation plan, as well as the resources and time required for
its implementation, are unclear. A broader debate also exists about the implications of a lapse in
authority for the U.S. economy, with stakeholders' positions based on their views of the rationales for
the Bank's existence.
Reorganization of Functions
Various trade reorganization proposals have been considered over time, including President Obama's
proposal in 2012 to reorganize the business- and trade-related functions of Ex-Im Bank and five other
agencies into an umbrella "department of trade." Such proposals prompt debates about whether
reorganization would reduce costs and duplication and improve the effectiveness and efficiency of trade
policy programs, or undermine the activities of federal agencies, given their differing missions, and
result in the creation of larger, more costly bureaucracy (For more, see CRS Report R42555, Trade
Reorganization: Overview and Issues for Congress, by Shayerah Ilias Akhtar.)