The US Senate Banking Committee looks set to reject President Donald Trump’s nominee to run the Export-Import Bank on Tuesday, but the 2-1/2-year freeze on its ability to finance major export projects could begin to thaw soon anyway.
Scott Garrett, a former Republican congressman who helped lead efforts by conservatives to shut down EXIM in 2015, has lost the support of Republican Senator Mike Rounds, giving Democrats enough votes to block his confirmation.
A Rounds spokeswoman said on Monday that the South Dakota Republican will vote against Garrett, but vote in favor of nominees for four other EXIM board positions and another nominee to be the agency’s inspector general. The panel has 12 Republicans and 11 Democrats.
All of the panel’s Democrats have pledged to oppose Garrett but support the other nominees, likely giving them enough support for approval. Once approved by the full Senate, EXIM would see its full lending powers restored and could quickly begin clearing a $42 billion backlog of deals in its pipeline. EXIM opponents, who branded the bank as a source of “corporate welfare” for Boeing Co, General Electric and other big manufacturers, effectively shut down the bank’s lending operations in 2015.
Although Congress renewed EXIM’s charter by a wide margin in 2015, the bank has lacked a board quorum of three members since then, as some senators blocked new nominees. This has prevented it from making or guaranteeing loans above $10 million, locking it out of financing for commercial aircraft and engines, power plants, petrochemical plants and other large infrastructure projects. Major business lobbying groups, including the National Association of Manufacturers, have called for Garrett’s rejection because of concerns that he would undermine the bank from within.
Garrett vowed at his confirmation hearing that he would keep the bank “fully open” but struggled to convince Democrats that he believed in the bank’s mission to finance U.S. exports. Conservative fervor against the self-funded EXIM has waned as President Donald Trump has backed the trade bank, recognizing that it can aid his “America First” trade strategy and boost exports.
Scott Schloegel, who EXIM’s acting first vice president and a holdover from the Obama administration, said that the bank could probably approve half of the $42 billion worth of deals stuck in its pipeline in about six to eight months after the new board members are confirmed.
About $21 billion worth of the backlogged projects are in the power sector, with $14 billion in oil and gas, $3.6 billion in transportation including aircraft, $2 billion in infrastructure projects and $1.3 billion in technology including satellites and space launches, Schoegel said. He added that China has aggressively taken advantage of EXIM’s absence, however, particularly in the power sector, to win billions of dollars in new projects by offering fully financed bids to developing countries.
“Our mission fits very well with the president’s position, Schloegel told Reuters. “The more manufactured goods that we can finance and export out of the United States, the better off American workers will be.”