BROOMFIELD, Colo. — The Senate Banking Committee rejected the White House’s controversial nominee to chair the board of the Export-Import Bank while approving four other board nominees, a step towards allowing it to start financing aerospace deals again.
The committee, meeting in executive session Dec. 19, voted 13 to 10 to block the nomination of former congressman Scott Garrett to chair the bank’s board. Sens. Mike Rounds (R-S.D.) and Tim Scott (R-S.C.) jointed the committee’s 11 Democratic members to keep the committee from advancing the nomination to the full Senate for confirmation.
Garrett, a former Republican congressman from New Jersey, was nominated by the White House in April as the board’s chairman. When serving in the House prior to losing reelection in 2016, he had been a critic of the bank and voted against its reauthorization.
Appearing at a confirmation hearing Nov. 1, Garrett said he now supported the bank’s mission of export credit financing. “Rest assured that I am committed to keep the bank fully open and fully operational, period,” he said. “It will continue to operate, it will continue to receive and review and pass loans that will help manufacturing in this country.”
Democratic senators at the hearing were unconvinced of Garrett’s change of heart, and remained so when the nomination came up for a vote. “If the president is serious about a functioning bank, he didn’t show it by choosing Mr. Garrett,” said Sen. Sherrod Brown (D-Ohio), ranking member of the full committee, in an opening statement at the session. “It’s clear to me that Mr. Garrett is not being honest with this committee about why he wants to lead the bank.”
“I voted today against Mr. Garrett because I believe he is a principled man who simply believes in the abolishment of the bank, and that strong desire on his part to see it abolished as an example of crony capitalism would not have worked,” Rounds said in comments after the vote. “While I wish him no ill, I do believe he was not the right person to be the chairman.”
Garrett did have the support of Sen. Mike Crapo (R-Idaho), chairman of the committee. “He has committed that Ex-Im will remain fully functional, operating in a fair and transparent manner to support American jobs and provide maximum value to the United States taxpayer,” he said of Garrett in opening remarks.
In contrast to Garrett, the other four nominees for board positions won approval. The committee voted by wide margins to forward the nominations of Kimberly A. Reed, Spencer Bachus III, Judith DelZoppo Pryor and Claudia Slacik to the full Senate. It also approved the nomination of Mark L. Greenblatt to be the bank’s inspector general, also by a wide margin.
If the board nominees are confirmed, it would given the five-person board a quorum for the first time in more than two years. Without the quorum, the bank has been unable to approve deals larger than $10 million, which affects nearly all space-related ones, such as commercial satellites and launches.
The Aerospace Industries Association (AIA) has been pushing for the bank’s board to be reconstituted, supporting the four board nominees the committee advanced, while opposing Garrett based on his past opposition to the bank.
“Today, as American civil aviation and space systems manufacturers face fierce competition internationally, it is hard to believe that the U.S. still doesn’t have a fully functioning Export-Import Bank,” David Melcher, the president and chief executive of the AIA, said at a Dec. 14 luncheon.
“This may seem like an esoteric issue, but consider the consequences,” he said. Without the ability to approve large deals, the amount of Ex-Im support for the aerospace industry was far less than one percent of the levels prior to the bank’s lapse of authorization in 2015. “Think about the deals that we’re leaving on the table for our competitors to take unopposed.”
Quantifying the effects on the space industry has been difficult, but industry officials believe that some satellite deals, such as orders in 2015 for the ABS-8 satellite from Boeing and Azerspace-2 from Orbital ATK, fell through in large part because of the lack of Ex-Im financing.
In an AIA statement after the Dec. 19 vote, Melcher called for a quick confirmation of the four board members. “We urge the full Senate to quickly confirm the four nominees so they can restore the bank to full functionality and review and approve over $30 billion in American exports that are stalled absent a quorum on the bank’s board of directors,” he said. “The time for action is now.”
It’s not clear the Senate will act quickly. It has a backlog of other nominations to consider and other legislation action, including passage of a tax bill. In addition, some industry sources believe critics of the bank, like Sen. Richard Shelby (R-Ala.), may take steps to slow down consideration of the nominees. Shelby voted against the four approved nominees during the committee’s session.
