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Ryan, Hensarling, McCarthy call Ex-Im an example of corporate welfare; Sen. McConnell says bank could only be renewed as part of highway bill

By a vote of 313-118, the House on October 27, 2015, passed a bill that reauthorizes the expired Export-Import Bank for four years and makes a number of reforms to the bank's operations. The bill (HR 597),sponsored by Stephen Fincher (R-TN), was supported on the floor by 127 Republicans, though it was opposed by several House Republican leaders, including Majority Leader Kevin McCarthy (CA), Financial Services Committee Chairman Jeb Hensarling (TX) and Ways and Means Committee Chairman Paul Ryan (WI). The measure came to the floor only after supporters gathered enough signatures to discharge the bill out of committee, a rare maneuver in recent history.

The Ex-Im Bank's charter expired on June 30, preventing it from providing new loans or insurance, though it can service existing commitments.

Attached with this Alert please find the bill text for HR 597, which reflects the text of HR 3611 as substituted.

The bill came to the floor as the result of a discharge petition filed by Fincher. The petition gathered the requisite 218 signatures necessary to force a bill out of committee and to the House floor, including 42 Republicans. The petition required the House to vote on H. Res. 450, which provided the terms for floor debate on the Ex-Im bill while bypassing the Rules Committee. Under the resolution, the House took up HR 597 and automatically substituted the text of HR 3611, another Ex-Im bill offered by Fincher that is identical to the reauthorization the Senate passed in July as part of HR 22, its six-year highway bill. On Monday night (October 26), the House voted 246-177 to approve Fincher's discharge petition and bring HR 597 to the floor. Sixty-two Republicans voted in favor of discharging the bill on Monday.

Senate status. Don Stewart, a spokesman for Senate Majority Leader Mitch McConnell (R-KY), said on Monday that McConnell had no plans to move a stand-alone Ex-Im bill to the Senate floor, because "the leader is not going to spend a week of floor time on a bill he doesn't support." Stewart has said an Ex-Im reauthorization could come to the Senate floor as part of a larger "must pass" vehicle like the long-term highway bill, however. McConnell himself today said, "The way to achieve Ex-Im, if it's going to be achieved in the Senate, is in the highway bill."

The Senate passed an Ex-Im reauthorization as part of HR 22, the highway bill, by a vote of 65-34 on July 30. The language was based on S. 819, sponsored by Sen. Mark Kirk (R-IL) and Heidi Heitkamp (D-ND). On October 19, Kirk introduced another identical Ex-Im bill, S. 2183, which was placed directly on the Senate calendar using procedures to bypass committee referral, but Kirk today said the more likely vehicle was a House-Senate conference on the highway bill.

On October 26, Sen. James Inhofe (R-OK) told BNA that some Republicans are weighing an alternative to the Kirk-Heitkamp measure that "would have more teeth" for reforming the bank, though Heitkamp said such a move "would be a big, big mistake" as there's "big consensus around the Kirk-Heitkamp bill."

House GOP reaction. On the House floor during floor debate, Ryan, who is expected to be elected Speaker later this week, gave a statement sharply critical of the Ex-Im bill. "Are we going to reward good work or good connections? I think there are plenty other ways to expand opportunity in this country, and corporate welfare is not one of them," he said. "The biggest beneficiaries of this bank, two-thirds of their money go to 10 companies. Forty percent goes to one company ... This thing is crony capitalism, and I urge it be rejected."

After the House vote to pass the bill, Hensarling released a statement emphasizing that increasing numbers of Republicans have opposed the Ex-Im Bank: "The more Americans learn about the Export-Import Bank's political lending, corruption and fundamental unfairness, the more they want it to end. That's why we're seeing a record number in Congress vote to end Ex-Im both in the Senate, where a majority of Republicans voted against it in July, and today in the House. The last time the House voted on a long-term reauthorization of Ex-Im, only 93 members voted against it. On Tuesday, 118 voted no. Momentum is moving in favor of those who oppose Ex-Im's corporate welfare and instead support a competitive, free enterprise economy."

Provisions of the bill

HR 597, as modified by the discharge petition to reflect the text of HR 3811, has a number of changes from the original version of HR 597. It does not include, for example, a requirement that companies demonstrate that they tried and failed to first obtain private financing.

Among other provisions, HR 597 would:

— Reauthorize the bank through September 30, 2019, retroactive to its expiration on June 30. Its annual limit on outstanding loans, guarantees and insurance would be $135 billion for fiscal 2015 through 2019. If the bank's default rate for entities with outstanding loans is 2% or more for one quarter, the bank could not exceed the amount of outstanding financing on the last day of that quarter until the rate falls below 2%.

— Require the bank to establish a reserve fund that contains at least 5% of its outstanding amounts, "to protect against future losses." The bill would limit principal amounts for medium-term financing to $25 million and raise the minimum amount above which the bank is required to consider the environmental effects of a product. The bank would have to conduct a study on the extent to which bank products are used by companies that export information and communications technology services.

— Prohibit Ex-Im from denying an application for financing, based solely on the industry involved, for energy-related projects. It would effectively override the Obama Administration's guidance restricting support for coal-fired power plants abroad.

— Direct the GAO to review the adequacy of the bank's fraud control efforts every four years and submit a report to Congress, one of several provisions aimed at tougher oversight. An Office of Ethics would be established in the bank to oversee ethics issues, and a chief ethics officer would be appointed by the president of Ex-Im and approved by the board. A chief risk officer would also be created to oversee risk issues, appointed by the bank's president.

— Allow the bank to establish a pilot program under which it could enter into contracts for reinsurance so that it can share risks with the private sector. The aggregate amount of liability that Ex-Im could transfer through risk-sharing would be limited to $1 billion per contract and $10 billion per year. The pilot program would terminate on September 30, 2019.

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ATTACHMENT

JCT estimated revenue effects

House amendment to the Senate amendment

Amendment to the House amendment to the Senate amendment