Boeing is hopeful that the US Ex-Im Bank’s ability to sign off US$10m-plus transactions will be restored in “the months ahead”, but at present there is no timetable from the Senate Banking Committee of when this might occur.
Boeing (NYSE:BA) is hopeful that the US Ex-Im Bank’s ability to sign off US$10m-plus transactions will be restored in “the months ahead”, but at present there is no timetable from the Senate Banking Committee of when this might occur.
The export credit agency was out of action for much of last year after the renewal of its charter was delayed, hindering the ability of US-based commercial space manufacturers like Boeing, Lockheed Martin (NYSE:LMT) and Orbital ATK (NYSE:OA) to offer competitive financing options for their customers.
Ex-Im was resuscitated by the Senate in December, but new rules for the ECA mean that any transactions of US$10m or more now need to be approved by a majority of the bank’s board.
At present Ex-Im’s board is one member shy of its three-person quorum required to vote on decisions, and the Senate Banking chairman Richard Shelby (pictured) – a vocal critic of Ex-Im – has shown no inclination to schedule a hearing to approve President Obama’s candidate for the vacancy.
Obama nominated Mark McWatters, a Republican endorsed by Senate Majority Leader Mitch McConnell, for the post on 11 January.
The stalling is consistent with Shelby’s prior behaviour. The senior senator for Alabama has failed for an entire year to allow votes on any of the President’s nominees, including Patricia Loui-Schmicker – the previous Democrat nominee to Ex-Im eventually abandoned in favour of a Republican.
Senator Sherrod Brown, a Democrat colleague of Shelby’s on the committee, has described the situation as “outrageous”.
Shelby has said that for now he is focused on his Senate primary, set to take place on 1 March, as the 81-year-old looks to secure his sixth Senate term.
One beltway insider told SatelliteFinance that “no one thinks” a hearing will be scheduled before the primary, and “many are gloomy about after that”. The person added that the impasse was a “big problem”.
Commenting on when a hearing for McWatters nomination could be held, Shelby has said he wants Obama to first nominate a candidate for the position of Federal Reserve vice chairman of supervision – a role created in 2010 that remains vacant.
Despite Shelby’s intransigence, Boeing has taken heart from the strong bipartisan support for the bank – sometimes referred to as ‘Boeing’s bank’ – which saw senators vote 83-16 in December to restart its operations.
The aerospace giant has said that, for the mean time, it is focusing on minimising risks to upcoming deliveries, and ensuring financing alternatives are there for its customers. Lockheed and Orbital ATK declined to comment on the Ex-Im situation.
The National Association of Manufacturers has called on legislators to speed up the nomination approval process.
NAM VP of international economic affairs Linda Dempsey said: “We urge the Senate to take action quickly on this nomination and help ensure the Ex-Im Bank — a critical trading tool for manufacturers of all sizes — is able to fulfill its mission of supporting U.S. job growth through exports.
“Ex-Im Bank’s bipartisan board of directors is instrumental to its day-to-day operations – from managing the Bank to approving its transactions. Stable, dynamic leadership will ensure the bank maintains its track record of continuous improvements, fiscal responsibility and effective export promotion.”
Both NAM and Boeing spent heavily on lobbying in 2015. Boeing retained multiple public affairs firms and registered US$21.9m in lobbying expenses, while NAM spent US$17m.
