H.R. 2072: Export-Import Bank Reauthorization Act of 2012

H.R. 2072

Export-Import Bank Reauthorization Act of 2012

Date
May 9, 2012 (112th Congress, 2nd Session)

Staff Contact
Communications

Floor Situation

On Wednesday, May 9, 2012, the House is scheduled to consider H.R. 2072, the Export-Import Bank Reauthorization Act of 2012, under a suspension of the rules requiring a two-thirds majority for approval.  The bill was originally introduced on June 1, 2011, by Rep. Gary Miller (R-CA) and, following a full committee mark-up on June 22, 2011, was reported by the Committee on Financial Services on September 8, 2011.

Bill Summary

H.R. 2072 would extend the bank’s charter through fiscal year 2014 and would place limitations on its outstanding loans, guarantees, and insurance.  Specifically, the bill would raise the bank’s exposure cap from the current $100 billion to $120 billion in FY2012, $130 billion in FY2013, and $140 billion in FY2014.

The bill would condition the FY2013 and FY2014 exposure limits on the bank maintaining a default rate of less than 2 percent, in addition to the following:

  • For FY2013: submission of a business plan to Congress that includes market analyses, risk exposure assessments, estimations of compliance with the bank’s small business, sub-Saharan African, and carbon policy mandates, as well as an operational evaluation of resource adequacy;
  • For FY2014: (1) submission of a report addressing implementation of recommendations following a Comptroller General’s review of the bank’s operations and risk management practices, and (2) submission of a report by the Secretary of the Treasury on the status of negotiations with other major exporting countries to reduce/eliminate export subsidies.

The bill would also direct the bank to monitor and calculate, not less than quarterly, the rates of default on bank-provided financing, and if the rate equals or exceeds two percent, the bank would be required to submit to Congress a report on processes and controls in place, as well as a plan to reduce the default rate to less than two percent.  If a default rate of two percent is sustained for six months, the Secretary of the Treasury would be required to provide an independent third party to conduct a safety and soundness review of the bank’s programs and funds.

The bill would also direct the bank to set due diligence standards for its lender partners and participants to minimize or prevent fraudulent acitivity.

The bill would require the bank to seek a creditor status that is not subordinate to other creditors when entering into financing contracts, in order to reduce risk and enhance recoveries for the bank.

The bill would also require the bank to provide a notice and comment period for bank transactions exceeding $100,000,000.  Any comments would be provided in writing to the Board of Directors of the bank before any final action on such an application for financing.  The Board of Directors would then be required to make public a summary of the facts found and conclusions reached in detailed analysis with respect to the loan or guarantee that is subject to comments.

The bill would also require additional transparency in the categorization of purpose of loans and guarantees in its annual report, in addition to bank guidelines for conducting economic impact analyses.

The bill would require the bank to report to Congress within 180 days after the date of enactment on the extent to which its programs meet the needs of small businesses in obtaining bank financing for exports.

The bill would also require the bank to review and report to Congress (not later than one year after the date of enactment) its domestic content policy for medium- and long-term transactions and the effect of such policy on maintenance and creation of jobs in the United States, to include the manufacturing and service workforce.

The bill would also direct the Comptroller General to study and report to Congress on the bank’s methodology used in calculating the effects of the provision of financing by the bank on the creation and maintenance of employment in the U.S. 

The bill would require the Comptroller General to audit, at least every four years, the bank’s transactions to determine compliance with underwriting guidelines, lending policies, due diligence procedures, content guidelines, and the adequacy of the bank’s fraud controls.

The bill would prohibit the bank from approving any financing for persons involved in sanctionable activities with respect to Iran.

The bill would also create representation on the bank’s advisory committee for the textile industry and would require the committee to consider ways to promote the financing of bank transactions for the textile industry, to increase bank support for the exports of textile components or inputs made in the U.S. and to support jobs in the domestic textile industry.  The bank would also be required to include considerations made under this section in its annual report to Congress.  Additionally, the bill would require the bank to conduct a study on the extent to which its financing is available and used for goods manufactured in the U.S. used in the global textile and apparel supply chains.

Lastly, the bill would make a technical correction amending the statute to remove the countries of Cambodia, Laos, and Yugoslavia from a list of Marxist-Leninist countries restricted from receiving aid from the bank in the exercise of its functions.

Background

According to the Congressional Research Service, the Export-Import Bank of the United States (Ex-Im Bank) operates under a renewable charter, the Export-Import Bank Act of 1945 (P.L. 79-173), as amended. The Ex-Im Bank's most recent stand-alone reauthorization (P.L. 109-438) was in 2006, when Congress extended the Bank's authority through September 30, 2011. Since then, Congress has extended the Ex-Im Bank's authority through appropriations vehicles. The FY2012 Consolidated Appropriations Act (P.L. 112-74) extended the Ex-Im Bank's authority through May 31, 2012.

The Ex-Im Bank is the official export credit agency (ECA) of the United States. The Bank was established in 1934 and became an independent agency in the executive branch in 1945. Its mandate is to support U.S. exports and the employment of U.S. workers. Congress has an important role in reauthorizing the Bank, appropriating funds for the Bank, and conducting oversight of the Bank.

The Ex-Im Bank uses its authority and resources to finance U.S. exports primarily in circumstances when alternative, private sector export financing may not be available or is prohibitively expensive or risky. It also may provide financing to support the competitiveness of U.S. exporters in circumstances when foreign governments extend export financing to their firms. The Ex-Im Bank's transactions are backed by the full faith and credit of the U.S. government.

The Bank's charter requires that its financing have a reasonable assurance of repayment; directs the Bank to supplement, and not compete with, private capital; requires the Bank to notify Congress of proposed transactions above $100 million; and includes other limitations on the Bank's activities. The Bank's authority to lend, guarantee, and insure is statutorily limited to a total of $100 billion.

Since its inception, the Bank estimates that it has supported more than $400 billion in U.S. exports. Its main programs to finance U.S. exports are direct loans, export credit guarantees, working capital guarantees, and export credit insurance.

Cost

There is no Congressional Budget Office (CBO) estimate available at this time.