Export-Import Bank of the United States

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Export-Import Bank of the United States
US-ExportImportBank-Seal.svg
Agency overview
Formed February 2, 1934
Headquarters Lafayette Building
Washington, D.C.
Employees 395 (2006)
Agency executive Fred Hochberg, Chairman and President
Website
www.exim.gov

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 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. 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 two-year term in 2012.[1] 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.

Contents

Export-Import Bank [edit]

US exports in 2006

The U.S. Export-Import Bank (Ex-Im Bank) is the principal government agency responsible for aiding the export of American goods and services 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[2] (in the People's Republic of China) do not abide by the OECD rules.

History [edit]

The bank was originally organized as a District of Columbia banking corporation by Executive Order 6581 from Franklin D. Roosevelt 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. The Bank's first transaction was a $3.8 million loan to Cuba in 1935 for the purchase of U.S. silver ingots.[3] 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".[4][5]

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.[4]

List of Chairmen, Presidents and Directors [edit]

Small business programs [edit]

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.[citation needed]

Export Credit Insurance [edit]

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.[citation needed]

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.[citation needed]

Working Capital Guarantee [edit]

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.[citation needed]

Types of loans [edit]

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.[citation needed]

Criticism [edit]

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 or Enron 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 (CNNP)).[9] The majority of loan guarantees over 2007 and 2008 went to companies purchasing Boeing aircraft.[10] In 2012, the Bank's loan guarantees became even more skewed, with 82 percent of them going to Boeing customers. [11]

However, the current congressional mandate for the Export-Import Bank of the United States is to focus on small business support.[1]

Timothy Carney of the Washington Examiner has written that the Bank:[12]

epitomizes corporate welfare. It also is a prime example of unaccountability. The agency is independent of any cabinet 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.[13]

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.[14] 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.[15] However, Ex-Im Bank fossil fuel financing and associated greenhouse gas emissions grew swiftly after the settlement agreement, coinciding with Chairman Hochberg's tenure. Between 2009 and 2012, Ex-Im Bank fossil fuel financing grew from $2.56 billion to nearly $10 billion.[16][17]

Environmental groups say that under the Obama Administration the Ex-Im Bank is on a "fossil fuel binge," which “makes a mockery” of President Obama’s stated commitment to phase out fossil fuel subsidies.[18][19] In December, 2009, Ex-Im Bank Directors approved $3 billion dollars in financing for the ExxonMobil-led Papua New Guinea Liquid Gas project in December, 2009, just as President Obama flew to climate change negotiations in Copenhagen. [20] The project has reportedly sparked violence and in April, 2012, the Papua New Guinea government called in troops to quell opposition from villagers after a landslide linked to a quarry that had been used by the project killed an estimated 25 people.[21][22]

In 2010, environmental groups criticized the Ex-Im Bank Directors for approving $917 million in financing for the 3,960 megawatt Sasan coal fired power plant in India after initially rejecting the project on climate change grounds. Environmental groups say that in reversing the decision the agency’s Chairman, Fred Hochberg and Board of Directors "caved in" to political pressure from Wisconsin politicians.[23] [24][25][26][27] In 2011, several environmental groups protested at Export-Import Bank headquarters, unsuccessfully urging Chairman Hochberg and Board of Directors to reject $805 million in financing for the 4,800 megawatt Kusile coal fired power plant in South Africa,[28] which environmental groups say is the largest carbon emitting project in the agency's history, which will not alleviate poverty but will emit excessive local air pollution which health experts say causes damage the respiratory, cardiovascular, and nervous systems and deaths resulting from heart disease, cancer, stroke, and chronic lower respiratory diseases.[29][30][31][32]

In 2012 three environmental organizations filed a lawsuit against Chairman Hochberg and the Ex-Im Bank for the agency’s financing of two liquid natural gas projects being constructed inside the Great Barrier Reef World Heritage Area. The lawsuit alleges that Ex-Im Bank financing for the projects violates U.S. environmental and cultural heritage laws.[33]

References [edit]

  1. ^ a b [1], which became Public Law 112-122 on May 30, 2012.
  2. ^ "The Export-Import Bank of China". English.eximbank.gov.cn. Retrieved 2011-12-27. 
  3. ^ "A Reporter's Guide To Ex-Im Bank". Retrieved 2007-11-15. 
  4. ^ a b "Records of the Export-Import Bank of the United States (EIBUS)". Retrieved 2007-11-15. 
  5. ^ "Notes to 12 U.S.C. § 635". Retrieved 2007-11-15. 
  6. ^ a b "75 Years of Ex-Im Bank History: Top 10 Lists". Ex-Im Bank of the U.S. 2008-09-30. Retrieved 2011-12-27. 
  7. ^ "Charles Lord, 64, Dies; An Investment Banker". The New York Times. 1993-01-13. Retrieved 2011-12-27. 
  8. ^ "Board of Directors". Ex-Im Bank of the U.S. 2011-11-16. Retrieved 2011-12-27. 
  9. ^ Carney, Timothy (May 31, 2002). "Bank Scam". National Review. Retrieved 2007-12-19. 
  10. ^ Pew Analysis Shows More Than 60 Percent of Export-Import Bank Loan Guarantees Benefited Single Company
  11. ^ Boeing and Obama sitting in a tree, K-I-S-S-I-N-G
  12. ^ Carney, Timothy (2011-03-15) John Kerry’s ‘Infrastructure Bank’: A corporate welfare slush fund, Washington Examiner
  13. ^ Harris, Byron (December 27, 2007). "Drugs tied to $243 million in bogus loans". WFAA-TV. Archived from the original on 2007-12-31. Retrieved 2007-12-28. 
  14. ^ "Climate Change Lawsuit". Retrieved 2009-06-25. 
  15. ^ "Ex-Im Settlement text". Retrieved 2009-06-25. 
  16. ^ Ex-Im Bank Annual Reports, http://www.exim.gov/about/library/reports/annualreports/
  17. ^ Fact Sheet: U.S. Export-Import Bank's Fossil Fuel and Renewable Energy Financing, Pacific Environment, http://pacificenvironment.org/downloads/FACT%20SHEET:%20ExIm%20Bank%20fossil%20fuel%20financing.pdf
  18. ^ Drajem, Mark, Obama's Trade Goal Fights his Clean-Energy Plan, Bloomberg, March 11, 2010, available at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=azsyfkxGOAkY
  19. ^ McCabe, Jess, "Ex-Im Urged to End Fossil Fuel Binge, Support Renewables," Environmental Finance, August 12, 2010, available at http://www.environmental-finance.com/news/view/1275"/www.environmental-finance.com/news/view/1275
  20. ^ Terrance Samuel, "Its Not Just About Copenhagen," The American Prospect, December 10, 2009, http://prospect.org/article/its-not-just-about-copenhagen-0
  21. ^ Work on LNG Project Resumes in PNG’s Hella, locals confused over troop deployment, http://www.rnzi.com/pages/news.php?op=read&id=68001
  22. ^ Further Updates on Tumbi Landslide from RNZI, LNG Watch, Papua New Guinea, available at http://lngwatchpng.blogspot.com/2012/03/further-updates-on-tumbi-landslide-from.html
  23. ^ Export-Import Bank, Summary of Minutes of Meeting of Board of Directors, Item # 2, June 24, 2011, available at http://www.exim.gov/article.cfm/B3B56631-911C-50EC-098514F87797E0AC/
  24. ^ Export-Import Bank, Summary of Minutes of Meeting of Board of Directors, Item # 7, October 21, 2010, available at http://www.exim.gov/article.cfm/1D82DCA5-F618-8500-B1E268D85B90C44C/
  25. ^ Jess McCabe, "U.S. Ex-Im Flip-Flops on Giant Indian Coal Project," Environmental Finance, July 1, 2010, available at http://www.environmental-finance.com/news/view/1215"com/news/view/1215
  26. ^ Andrew Bast, "Its Not Easy Being Green," Newsweek, July 16, 2010, available at http://www.thedailybeast.com/newsweek/2010/07/16/it-s-not-easy-being-green.html
  27. ^ U.S. Taxpayer-Funded Bank, Under Pressure from Obama Administration, Gives Green Light to Giant Dirty Coal Plant in India, Michelle Chan, Friends of the Earth, Huffington Post, July 15, 2010, available at http://www.huffingtonpost.com/michelle-chan/us-taxpayer-funded-bank-u_b_648174.html
  28. ^ Protestors: Why Lock the World into a Coal Powered Future, Compass, Sierra Club, available at http://sierraclub.typepad.com/compass/2011/01/protesters-why-lock-the-world-into-a-coal-powered-future.html
  29. ^ South African Coal Plant Wins U.S. Backing Over Environmentalist Protests", Bloomberg, April 14, 2011. http://www.bloomberg.com/news/2011-04-14/south-african-coal-plant-wins-u-s-backing-over-environmentalist-protests.html
  30. ^ Your Tax Dollars at Work: A Giant Coal Plant in South Africa, Mother Jones, December 9, 2009, available at http://motherjones.com/environment/2011/12/south-africa-coal-kusile-durban-climate
  31. ^ U.S. Ex-Im Bank Finances Largest Carbon Emitting Project in its History, Friends of the Earth, et.al., http://www.foe.org/news/archives/2011-04-us-ex-im-bank-finances-largest-carbon-emitting-proje
  32. ^ March 14, 2011 letter to Ex-Im Bank Chairman Fred Hochberg from Physicians for Social Responsibility, http://pacificenvironment.org/downloads/PSR%20Pulmonary.pdf
  33. ^ Lawsuit Targets $3 Billion in U.S. Funding for Fossil Fuel Project in Australia's Great Barrier Reef, Center for Biological Diversity press release, December 13, 2012, available at http://www.biologicaldiversity.org/news/press_releases/2012/export-import-bank-12-13-2012.html

External links [edit]

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