Export-Import Bank of the United States

Export-Import Bank of the United States

Overview
The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States federal government. It was established in 1934 by an executive order, and made an independent agency
Independent agencies of the United States government
Independent agencies of the United States federal government are those agencies that exist outside of the federal executive departments...

 in the Executive branch by Congress in 1945, for the purposes of financing and insuring foreign purchases of United States goods for customers unable or unwilling to accept credit risk
Credit risk
Credit risk is an investor's risk of loss arising from a borrower who does not make payments as promised. Such an event is called a default. Other terms for credit risk are default risk and counterparty risk....

.
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The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States federal government. It was established in 1934 by an executive order, and made an independent agency
Independent agencies of the United States government
Independent agencies of the United States federal government are those agencies that exist outside of the federal executive departments...

 in the Executive branch by Congress in 1945, for the purposes of financing and insuring foreign purchases of United States goods for customers unable or unwilling to accept credit risk
Credit risk
Credit risk is an investor's risk of loss arising from a borrower who does not make payments as promised. Such an event is called a default. Other terms for credit risk are default risk and counterparty risk....

. The mission of the Bank is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers. The Bank is chartered as a government corporation by the Congress of the United States; it was last chartered for a five year term in 2006. Its Charter spells out the Bank's authorities and limitations. Among them is the principle that Ex-Im Bank does not compete with private sector lenders, but rather provides financing for transactions that would otherwise not take place because commercial lenders are either unable or unwilling to accept the political or commercial risks inherent in the deal. Its current chairman is Fred Hochberg.

Export-Import Bank



The U.S. Export-Import Bank (Ex-Im Bank) is the principal government agency responsible for aiding the export of American goods and services, and thereby creating and sustaining U.S. jobs, through a variety of loan, guarantee, and insurance programs. Generally, its programs are available to any American export firm regardless of size. Similar banks, or export credit agencies (ECAs), are operated by a number of foreign countries. Many ECAs agree to conduct their activities by following a set of common rules and principles through their membership in the Organization for Economic Cooperation and Development (OECD); these ECAs are generally in the so-called "developed" countries. The goal is to permit exporters in various countries to compete on the basis of the quality of their goods and services, not on preferential financing terms. Other ECAs, such as the China Exim Bank (in the People's Republic of China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...

) do not abide by the OECD rules.

History


The bank was originally organized as a District of Columbia banking corporation by Executive Order 6581 from Franklin D. Roosevelt
Franklin D. Roosevelt
Franklin Delano Roosevelt , also known by his initials, FDR, was the 32nd President of the United States and a central figure in world events during the mid-20th century, leading the United States during a time of worldwide economic crisis and world war...

 on February 2, 1934, under the name Export-Import Bank of Washington. The stated goal was "to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States and other Nations or the agencies or nationals thereof", with the immediate goal of making loans to the Soviet Union
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....

. The Bank's first transaction was a $3.8 million loan to Cuba
Cuba
The Republic of Cuba is an island nation in the Caribbean. The nation of Cuba consists of the main island of Cuba, the Isla de la Juventud, and several archipelagos. Havana is the largest city in Cuba and the country's capital. Santiago de Cuba is the second largest city...

 in 1935 for the purchase of U.S. silver ingots. Congress continued the bank as a government agency, using a series of laws between 1935 and 1943 to place it under various government departments, before making it an independent agency on July 31, 1945, with the Export-Import Bank Act of 1945. On March 13, 1968, further legislation changed the name to "Export-Import Bank of the United States".

Roosevelt created a Second Export-Import Bank of Washington with Executive Order 6638 on March 9, 1934, with the specific aim to aid trade with Cuba, and it was dissolved in 1936 with its obligations transferred to the first bank.

List of Chairmen, Presidents and Directors

  • R. Walton Moore
    R. Walton Moore
    Robert Walton "Judge" Moore was a Virginia lawyer, U.S. Representative from Virginia, Assistant Secretary of State, and one of the few Virginia politicians to embrace the New Deal....

    , (Chairman) 1934-1941
  • Warren Lee Pierson, (President) 1936-1945
  • Hawthorne Arey, (Director) 1949-1953; 1954-1961
  • William McChesney Martin, Jr.
    William McChesney Martin, Jr.
    William McChesney Martin, Jr. was the ninth and longest-serving Chairman of the United States Federal Reserve, serving from April 2, 1951 to January 31, 1970 under five Presidents...

     1954
  • George A. Blowers, (Director) 1954-1961
  • Harold F. Linder, (Chairman) 1961-1968
  • Walter C. Sauer, (Vice Chairman) 1962-1976
  • Tom Lilley
    Tom Lilley
    Thomas "Tom" Lilley was a former professional footballer who played as a defender who played for Huddersfield Town, Nelson, Hartlepool United, Sunderland, St. Mirren & Fulham....

    , (Director) 1965-1972
  • John C. Clark, (Director) 1969-1976
  • R. Alex McCullough, (Director) 1969-1977
  • Thibaut de Saint Phalle 1977-2001
  • Charles E. Lord
    Charles Lord
    Charles Edwin Lord II also known as Charles E. Lord. was an investment banker and appointed Vice-Chairman of the Export-Import Bank of the United States of the United States by President Reagan...

    , (Vice Chairman) 1981
  • Rita M. Rodriguez, (Director) (1982-1999)
  • Eduardo Aguirre
    Eduardo Aguirre
    Eduardo Aguirre Reyes, Jr. , is a principal in Atlantic Partners, an international consulting firm, based in Houston....

    , (Vice Chairman) 2001
  • J. Joseph Grandmaison 2001
  • Philip Merrill
    Philip Merrill
    Philip Merrill was an American diplomat, publisher, banker, and philanthropist who committed suicide while traveling alone on his boat in the Chesapeake Bay.- Career and philanthropy :...

    , (Chairman) 2002
  • April Foley, (Vice Chairman) 2003
  • Max Cleland
    Max Cleland
    Joseph Maxwell Cleland is an American politician from Georgia. Cleland, a Democrat, is a disabled US Army veteran of the Vietnam War, a recipient of the Silver Star and the Bronze Star for valorous action in combat, and a former U.S. Senator...

     2003-2007
  • Fred Hochberg, (Chairman) 2009-Present

Small business programs


The Export-Import Bank of the United States focuses much of its energy and resources to providing support to U.S. small businesses for export of U.S. made products. There are no transactions, in terms of dollars, that are too small for the Ex-Im Bank to consider. Programs aimed at this sector include Export Credit Insurance, and Working Capital Guarantee programs. From October 2005 through September 2006 the Ex-Im Bank authorized $3.2 billion in financing directly to U.S. small businesses.

Export Credit Insurance


Export Credit Insurance from Export-Import Bank of the United States provides insurance policies to U.S. companies and banks to mitigate risks of non-collection from foreign buyers and borrowers. Risks covered include default due to commercial reasons, such as buyer insolvency and cash-flow problems, as well as political risks such as war, civil unrest and currency flow restrictions.

Export Credit Insurance policies can be issued to companies directly exporting, or to banks lending to foreign buyers. Export-Import Bank of the United States has a special insurance program for small businesses, with no premium minimum, and a pay-as-you-go premium structure. This is often the most affordable trade credit insurance available for new and small exporters.

Working Capital Guarantee


The Working Capital Guarantee program provides loan guarantees to banks willing to lend to exporting companies. The loan guarantee is secured against foreign accounts receivable, and against work in process and finished goods inventory destined for export.

Types of loans


The Ex-Im Bank provides two types of loans: direct loans to foreign buyers of American exports and intermediary loans to responsible parties, such as foreign government lending agencies which relend to foreign buyers of capital goods and related services (for example, a maintenance contract for a jet passenger plane). Both programs cover up to 85 percent of the value of the exported goods and services, with repayment terms of one year or more.

Criticism


The Bank has come under criticism for allegedly favoring special interests ahead of that of the U.S. taxpayer. These interests include that of heavily subsidized corporations such as Boeing
Boeing
The Boeing Company is an American multinational aerospace and defense corporation, founded in 1916 by William E. Boeing in Seattle, Washington. Boeing has expanded over the years, merging with McDonnell Douglas in 1997. Boeing Corporate headquarters has been in Chicago, Illinois since 2001...

 or Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...

 as well as those of well-connected foreign governments and nationals (such as a 1996 $120 million low-interest loan to the China National Nuclear Power Corporation
China National Nuclear Corporation
The China National Nuclear Corporation was established on 16 September 1988 by a Government of China decree. CNNC's president and vice-president are appointed by the Premier of the State Council. However the CNNC is a self-supporting economic corporation, not a government administrative body. It...

 (CNNP). The majority of loan guarantees over 2007 and 2008 went to companies purchasing Boeing
Boeing
The Boeing Company is an American multinational aerospace and defense corporation, founded in 1916 by William E. Boeing in Seattle, Washington. Boeing has expanded over the years, merging with McDonnell Douglas in 1997. Boeing Corporate headquarters has been in Chicago, Illinois since 2001...

 aircraft.

However, the current congressional mandate for the Export-Import Bank of the United States is to focus on small business support.

Timothy Carney of the Washington Examiner
Washington Examiner
The Washington Examiner is a free daily newspaper published in Springfield, Virginia, and distributed in the Washington, D.C. metropolitan area. It is owned by Denver billionaire Philip Anschutz....

has written that the Bank:


epitomizes corporate welfare
Corporate welfare
Corporate welfare is a pejorative term describing a government's bestowal of money grants, tax breaks, or other special favorable treatment on corporations or selected corporations. The term compares corporate subsidies and welfare payments to the poor, and implies that corporations are much less...

. It also is a prime example of unaccountability. The agency is independent of any cabinet
United States Cabinet
The Cabinet of the United States is composed of the most senior appointed officers of the executive branch of the federal government of the United States, which are generally the heads of the federal executive departments...

 department, and it hands out loans and loan guarantees basically at its own discretion. Congress typically gives Ex-Im lengthy reauthorizations, thus minimizing congressional oversight. In recent years, Ex-Im was moved off-budget, meaning it funds itself with the repayments from old loans and the fees from new ones. So it’s kind of like Fannie Mae was, before its exposure became real and the taxpayers had to come in and bail it out.


In 2007, WFAA-TV in Dallas revealed that the Ex-Im Bank had given at least $243 million in fraudulent loans to companies doing business with Mexico, including giving loans to companies with no verifiable address and individuals who were known associates of the Sinaloa and Juarez drug trafficking cartels.

In February 2009, the Ex-Im Bank settled a seven-year-long legal proceeding brought by Friends of the Earth, other NGOs, and various American cities. The plaintiffs claimed that the Ex-Im Bank and the Overseas Private Investment Corporation (OPIC) provided financial assistance to oil and other fossil fuel projects without first evaluating the projects' global warming impacts. In 2005, the plaintiffs were granted legal standing to sue these federal bodies. The landmark decision is the first time that a federal court has specifically granted legal standing for a lawsuit exclusively challenging the federal government's failure to evaluate the impacts of its actions on the Earth's climate and U.S. citizens. In its settlement agreement, the Ex-Im Bank agrees to evaluate the carbon dioxide emissions as part of its determination for qualification for a project.

External links