Tuesday, September 29, 2009

The Export-Import Bank of the United States

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 agencyIndependent agencies of the United States government
Independent agencies of the United States Government are those Executive Government agency of the federal government of the United States that exist outside of the United States 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 riskCredit risk
Credit risk is the risk of loss due to a debtor's non-payment of a loan or other line of credit ...
. 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 James H. LambrightJames H. Lambright
James H. Lambright is the 22nd Chairman of the Export-Import Bank of the United States. As such he is on the 46th level of the United States Order of Precedence....
.
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 ChinaPeople's Republic of China
The People's Republic of China , commonly known as China, is the largest country in East Asia and the List of countries by population in the world with over 1.3 billion people, approximately a fifth of the world's population....
) do not abide by the OECD rules.
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.
Direct and Intermediary 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 BoeingBoeing
The Boeing Company is a major aerospace and defense corporation, originally founded by William Edward Boeing in Seattle, Washington. Boeing has expanded over the years, merging with McDonnell Douglas in 1997....
or EnronEnron
Enron Creditors Recovery Corporation was an American energy company based in Houston, Texas, Texas. Before its bankruptcy in late 2001, Enron employed approximately 22,000 and was one of the world's leading electricity, natural gas, pulp and paper, and communications companies, with claimed revenues of nearly $101 billion in 2000....
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 CorporationChina 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....
(CNNP).
However, the current congressional mandate for the Export-Import Bank of the United States is to focus on small business support.
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.

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