Export-Import Bank Drama Continues

The Senate’s main business right now is the annual Defense Appropriations bill. The Export-Import Bank, or Ex-Im for short, might become part of that bill. Ex-Im caused one of the most contentious political fights in recent years. While the fight seemed over when Ex-Im re-opened last December after a five-month shutdown, there is still one more bit of drama to be resolved. That might happen this week.

Ex-Im is currently unable to make transactions larger than $10 million—essentially neutering an agency that does nearly 80 percent of its business in big deals with a literal top-ten of big businesses such as Boeing, General Electric, Caterpillar, and a handful of others. But Sen. Lindsey Graham (R-S.C.), who counts Boeing as a constituent, is trying to restore cronyism as usual at Ex-Im.

A bit of background: Ex-Im offers loans and loan guarantees to foreign buyers of U.S. products. For example, Ex-Im will guarantee loans that a foreign airline takes out—if the airline buys its jets from Boeing instead of Airbus.

For a number of reasons, free-market activists want to permanently close Ex-Im. These range from numerous corruption scandals to the harm Ex-Im does to other U.S. businesses, such as domestic airlines that compete with Ex-Im-subsidized foreign airlines.

Last year Congress refused to renew Ex-Im’s charter, which expires every few years. Ex-Im actually closed for five months, able to do nothing more than maintain its existing portfolio. It reopened when Ex-Im’s supporters succeeded in placing its reauthorization in a must-pass spending bill.

But their victory was a partial one. Ex-Im has a five-member board of directors that must approve any transaction larger than $10 million. As directors’ terms expired during the shutdown, the board was down to two members.

Here’s where the fun begins: Any vote on a $10 million-plus transaction has a quorum requirement of three members—meaning Ex-Im, though open for business, can only perform relatively small transactions until it gets more board members. These require Senate confirmation, and the Senate has shown no interest in considering any nominees.

Enter Sen. Graham, and the current controversy. He is threatening to create a loophole large enough to drive a truck through. If the president decides a $10 million-plus Ex-Im project has national security implications, Sen. Graham proposes giving the president the power to override Ex-Im’s quorum rule, allowing Ex-Im’s current diminished board to approve it.

We all know how creative politicians can be when it comes to tying anything and everything to national security. No doubt Boeing, which typically receives about half of Ex-Im’s business, will work very hard to push as many of its potential loan guarantees as possible through that loophole.

The worst part is that Sen. Graham isn’t pushing this idea as a stand-alone bill that could succeed or fail on its own merits. He is trying to fold it into the must-pass Defense Appropriations bill, which even Ex-Im’s fiercest opponents have to vote for.

What to do about it? Sen. Graham’s proposal is in an amendment he is offering to the defense bill, which is still in the Committee phase. So either the amendment must fail, or another senator must offer a counter-amendment to nullify the Graham amendment. The defense bill is in markup this week, so we could find out soon if Ex-Im’s cronyism will return to its previous vast scale.