Export-Import Bank

Fact Box

Export-Import Bank of the United States

Formed on February 2, 1934
Headquarters- Washington, D.C.
Chairman and President- Fred P. Hochberg
Employees (2014) 400
Operating Budget (2013) -- $90 million, Loans (2013) -- $27.3 billion
Website- exim.gov

Overview

The Export-Import Bank of the United States (Ex-Im Bank) is an independent, self-sustaining federal agency whose assistance is designed to help create and maintain U.S. jobs by financing the sale of American exports, primarily to emerging markets throughout the world. The financial activity of Ex-Im bank consists of providing loan guarantees, export-credit insurance, and direct loans—some of which are given to foreign businesses. The bank also has been known to help with the sale of equipment and technology that has aided the militaries of foreign governments with poor human rights records.

The bank was first created during the Great Depression to facilitate American exports to none other than the Soviet Union, but by the end of World War II, its mission had expanded to develop American export opportunities throughout the world. In 2010, Ex-Im Bank authorized $24.5 billion in financing to support U.S. exports worldwide. The bank claims that, throughout its history, it has supported more than $400 billion in exports, largely to developing markets around the globe, with 85% of transactions benefitting small businesses.

The Ex-Im Bank has weathered a number of controversies, including repeated calls from Republicans in recent years to defund the agency altogether.


History

The Export-Import Bank of Washington was created in 1934 as part of a larger economic policy promoting government spending to facilitate economic growth. Created during the Great Depression, the bank was conceived to help resolve problems of high unemployment, low income, low demand for goods and services, and slowed industrial production. While the U.S. was suffering through a dire economy, the Soviet Union was experiencing high industrial production from state-owned firms and zero unemployment. Under these economic conditions, the Soviet Union was seen as a market for U.S.-produced goods, and the export of goods to the Soviet Union was seen as a reasonable strategy for promoting U.S. economic growth and lowering unemployment.

Within a decade after its creation, the bank’s mission quickly expanded to include other foreign countries. By the end of World War II, the Export-Import Bank played a role in helping American companies participate in the expansion of U.S. industry to Europe and Asia as part of the post-war reconstruction effort. Because of the expanding post-war role of the bank and its growing importance, Congress formally designated it an independent government agency when it adopted the Export-Import Bank Act of 1945.

A 1968 amendment to the Export-Import Bank Act of 1945 renamed the bank the Export-Import Bank of the United States (Ex-Im Bank). Before 1980, the main avenue of export promotion through the bank was by way of direct loans to companies seeking to sell goods abroad. This program provided fixed interest rate loans that were most often given to businesses to fund high capital (plant and equipment) expenditures in industries such as aircraft manufacture and nuclear power. Boeing was a major recipient of assistance from the bank in an effort by the U.S. government to help the airplane manufacturer compete with Airbus, which received subsidies from the European Union.

In 1980, Congress limited the amount of direct lending by Ex-Im Bank, causing the bank to decrease its direct lending and increase its use of loan guarantees and insurance coverage as a means of facilitating the export of American goods.

During the 1980s, the Reagan administration sought to help the Saddam Hussein’s Iraq in its war against Iran through the exporting of “dual-use” technologies and equipment that could aid the Iraqi army without violating U.S. laws. Officials in the White House, State Department, and Pentagon discussed ways of financing these dual-use sales, including getting the Ex-Im Bank involved. But officials at the bank resisted being pulled into the scheme.

President George W. Bush signed the Export-Import Reauthorization Act of 2002 on July 14, 2002. This act renewed the bank’s charter through September 30, 2006, and included new rules for the provision of loans and insurance. The law now requires the bank to make a human rights assessment of any project over $10 million and to focus on projects that will promote U.S. job growth. The law also draws attention to compliance with U.S. responsibilities as a nation member of the World Trade Organization (WTO). The Export-Import Reauthorization Act of 2002 prohibits subsidization to any industry subject to a retaliatory countervailing duty through the WTO agreements.

The 2002 law was also supposed to prod the bank into providing more loans to small businesses. Congress called for the bank to give small companies from 10-20% of its total financing, but it didn’t put in place a structure to make that happen, and the bank never met the 20% goal from 2002–2006. So when lawmakers took up another reauthorization bill in 2006, they added more provisions to make sure the bank finally meets this goal.


What it Does

The underlying goal of the Export-Import Bank (Ex-Im Bank) of the United States is to promote the sale of U.S. goods abroad. The bank provides loans and insurance to privately owned companies to reduce the risk of selling in countries experiencing political or economic instability. In addition, the bank attempts to “level the playing field” of global markets for American companies by subsidizing U.S. industries in competition with foreign firms subsidized by their governments.

Federal law states that the bank is supposed to supplement, and not to compete with, private capital available from other financing sources, and that Ex-Im loans should be for specific purposes and offer reasonable assurance of repayment. The bank is authorized to have capital stock of $1 billion and may have loans, guarantees, and insurance aggregating up to $40 billion outstanding at any one time.

The Ex-Im Bank has initiated various programs designed to broaden the credit opportunities of U.S. industry. It provides a direct-lending program to aid in large sales of U.S. products, and it also makes available insurance and financial guarantees to assist exporters dealing with smaller sales of products and services. The bank has assisted in financing sales to foreign buyers of a wide range of American equipment, including fertilizer plants, bridges, jet aircraft, and locomotives. More examples are available through the bank’s published annual report.

Although much of its financial activity goes toward helping American businesses and institutions sell U.S. goods and services overseas, some of Ex-Im Bank’s commitments are given to foreign enterprises. For instance, direct loans are sometimes provided to foreign buyers with fixed-rate financing to help with their purchases from the United States. To qualify for Ex-Im Bank support, a product or service must have at least 50% U.S. content and not affect the U.S. economy adversely. The bank has also co-financed projects with the US Agency for International Development (USAID), the World Bank, and regional development banks.

Furthermore, assisting in the sale of American exports means not only promoting purchases such as automobiles or wheat, but also equipment with military applications. In the past, Ex-Im Bank has supported the sale of “dual use” exports—those with both military and civilian applications. Examples include loans given to Indonesia, Venezuela, and Brazil, which were used to purchase equipment for their militaries, including aircraft, trucks, and radio systems. Also, some of the larger American recipients of Ex-Im Bank help have included defense contractors, such as Northrop Grumman.

Information is also provided on the countries and regions that Ex-Im assistance goes toward. These include Africa; Brazil;Broader Middle East and North Africa; Central Asia and Caucasus Regions; China; India; Mexico; Russia; Turkey; and Ukraine.

For small businesses, the bank provides a special portal to obtain information on how to apply for assistance or loans.

The Ex-Im Bank is headquartered in Washington D.C., and has regional offices in the following locations: Northeast (New York); Southeast (Miami); Southwest (Houston); Midwest (Chicago); and the West (Orange County, San Diego and San Francisco).

The bank is managed by a bipartisan board of directors appointed by the president with the advice and consent of the Senate. There are also more than 30 bank officers who carry out the day-to-day functions of the bank.


Where Does the Money Go?

In its 2011 Annual Report, the Export-Import Bank of the United States published the estimated value of American exports assisted by the bank that benefited each state. The biggest winners were Washington ($15.95 billion), Texas ($2.46 billion), and California ($2.76 billion). The remaining states fared as indicated:

Over $1 billion

Illinois ($2 billion)

Florida ($1.21 billion)

New York ($1.03 billion)

Over $100 million

Georgia ($851 million)

New York ($772 million)

North Carolina ($612 million)

Massachusetts ($568 million)

Pennsylvania ($476 million)

Mississippi ($459 million)

New Jersey ($439 million)

Ohio ($435 million)

Connecticut ($368 million)

Indiana ($363 million)

Minnesota ($298 million)

Louisiana ($268 million)

Maryland ($252 million)

Oklahoma ($251 million)

Virginia ($250 million)

Oregon ($233 million)

Wisconsin ($221 million)

Kansas ($213 million)

South Carolina ($205 million)

Arkansas ($166 million)

Tennessee ($156 million)

Colorado ($151 million)

Arizona ($141 million)

Alabama ($113 million)

Nebraska ($102 million)

Over $10 million

South Carolina ($97 million)

New Hampshire ($65 million)

Utah ($56 million)

Kentucky ($48 million)

Iowa ($45 million)

Delaware ($39 million)

Nevada ($33 million)

Maine ($31 million)

Idaho ($28 million)

North Dakota ($13 million)

Rhode Island ($13 million)

Puerto Rico ($11 million)

Under $10 Million

New Mexico ($8 million)

Rhode Island ($7 million)

South Dakota ($3 million)

Vermont ($3 million)

District of Columbia ($2 million)

West Virginia ($554,000)

Montana ($500,000)

Hawaii ($465,000)

Arkansas ($231,000)

Wyoming ($0)


Data on Export-Import Bank



Growth in U.S. Export-Import Bank Authorizations from 2007-2011 (Source: Mercatus Center at George Mason University). For data on authorizations from 2010-2014, please see "Small Business Authorizations" graph above.

Source
  • http://www.allgov.com/departments/independent-agencies/export-import-bank-of-the-united-states?agencyid=7442
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