The Export-Import Bank of the United States (US Exim) has been restored to its full financing capacity with the long-awaited confirmation of three new board members by the US Senate, thereby ending four years of the export credit agency (ECA) being hamstrung by a lack of voting quorum.

In a bipartisan vote last week, an overwhelming majority of the Senate approved Kimberly Reed as US Exim president and chair, along with Spencer Bachus and Judith Delzoppo Pryor as board members. In doing so it re-establishes the quorum of a minimum of three members on US Exim’s board of directors needed to authorise transactions of more than US$10mn or with tenors longer than seven years for the first time since 2015, when its previous board members’ terms ended.

US exporters that rely on the support offered by US Exim argue that since 2015 they have been left at a competitive disadvantage when competing for business against foreign companies that did have ECA backing. Jeremy Shaw, global head of export finance and global trade executive for Emea at JP Morgan, tells GTR: “There’s a clear need for ECAs for transactions of all sizes, especially those above US$10mn. Not having US Exim operating at full capacity put US exporters at a disadvantage compared to those exporters who have a fully functioning ECA.”

As the new president and chair, Reed’s previous governmental experience includes serving in the US department of the treasury, where she headed the community development financial institutions fund that provides tax credits and financing to institutions investing in economically distressed communities.

Most recently, she was president of the International Food Information Council Foundation, a non-profit that collaborates on global food issues with governments, food and agricultural companies, and health organisations.

Pryor previously served as vice-president, office of external affairs, at the Overseas Private Investment Corporation, a self-sustaining US government agency that helps American businesses invest in emerging markets.

Meanwhile, Bachus was a member of the US House of Representatives from 1993 to 2015 before forming the law firm Bachus and Brom, where he was a partner.

The Senate confirmed that the three nominees will serve for staggered terms, with Reed’s and Pryor’s terms expiring in 2021, while Bachus will serve until 2023.

The nominees were first selected by President Donald Trump in 2017 and have spent the past two years waiting for Senate majority leader Mitch McConnell, who controls the business of the Senate, to allocate the necessary time to complete the final vote needed for the nominees to claim their positions. McConnell has been accused of dragging his feet on the issue as a result of a vocal anti-ECA lobby in the Senate, who consider US Exim’s financial support to be a form of corporate welfare which distorts the principles of a free marketplace.

Speaking to GTR in March on US Exim’s political challenges, Sherrod Brown, US senator and ranking member of the banking committee, called on McConnell to reject further obstruction by a few Republican senators and move quickly to confirm Trump’s board nominees.

Pressure has also been mounting on McConnell to allow a vote on the nominees following the Democrats’ successful retaking of the House of Representatives in 2018. The Democrats were responsible for pushing through US Exim’s mandate renewal in 2015 despite Republican opposition.

Although the nominees’ approval is a clear win for US Exim, it must still face the challenge of renewing its four-year mandate in September. Its opponents are expected to frustrate the process and may seek to insert amendments that would curb US Exim’s abilities.

In a statement on her new role, Reed says she is committed to furthering Trump’s agenda of ensuring that American workers can compete on a fair playing field in international trade and growing the US jobs market.

“I believe that freedom, in the form of free-market principles, is the best way to foster economic opportunity for all Americans. As we work together to reopen US Exim, I am dedicated to implementing positive reforms in advance of congressional reauthorisation. This will allow us to achieve great results for US workers, exporters, and the American taxpayer,” she says.

Senate action is still pending on two additional board nominees. Paul Shmotolokha is awaiting a vote on his proposed position as US Exim’s first vice-president, while Claudia Slacik is also hoping to join the ECA’s board.


Full-power restored

With its quorum restored, US Exim can now tackle the backlog of US$40bn-worth of unapproved financing deals that has accumulated since 2015.

Industry stakeholders have praised the Senate’s approval of the new board and highlighted the ECA’s ability in assisting US businesses bidding for deals overseas, creating jobs and adding to the US economy.

Tim Keating, executive vice-president, government operations for Boeing, one of the biggest beneficiaries of US Exim support, tells GTR: “Congress took a key step to help American companies compete and win in the international market.

“Now US Exim is fully operational and can begin approving the billions in deals stuck in the pipeline that 240,000 American manufacturing workers are counting on. US Exim is an important tool that levels the playing field for US companies, benefits thousands of small and medium-size businesses, strengthens our economy, and creates certainty for American workers.”

Boeing has previously blamed the lack of ECA funding for the loss of at least three major satellite deals since 2015. In March a spokesperson for the manufacturer explained to GTR that Boeing would continue to lose out to foreign competitors for as long as the bank was hobbled.

“If you’re not confident that US Exim will be there to support you then that may affect your decision on whether to buy Boeing,” he said.


Challenges to come

Beyond the need to renew its mandate, the ECA also faces other challenges to its longevity, including a bill to ‘eliminate’ it, which was brought forward by Republican congressman Justin Amash in March. At the bill’s introduction, Amash described the ECA as a “crony bank, which subsidises loans for a few politically connected corporations, such as aircraft giant Boeing, at the expense of American businesses and taxpayers”.

The bill is backed by five Republican co-sponsors and has been referred to the house committee on financial services.

Mike Gold, aerospace executive and attorney for satellite manufacturer Maxar, which uses US Exim’s financing facilities, argues that despite last week’s positive step forward, US Exim, along with its political allies and partners, must remain vigilant in the months ahead in order to head-off these threats and keep the ECA’s doors open.