The US Export-Import Bank: A Review of the Debate over Reauthorization
The Export-Import Bank of the United States (Ex-Im Bank)—the federal government’s export-credit agency—faces an uncertain future. With the bank’s charter soon to expire, Washington has become the scene of a fierce battle over whether to continue funding this obscure, Depression-era government bank.
This paper provides a brief overview of the history and operations of the Ex-Im Bank, followed by an examination of the key justifications for the bank’s continued authorization. Specifically, the paper considers the veracity of claims that the bank (1) plays a critical role in promoting US exports, (2) maintains or creates US jobs, (3) substantially benefits small businesses, (4) levels the playing field for US companies competing against foreign companies that receive benefits from their countries’ export-credit agencies, and (5) is a good deal for taxpayers. The paper concludes that the Ex-Im Bank’s activities and outcomes do not meet its own supporters’ standards and recommends that the bank’s charter be allowed to expire.
A Brief History and Overview of the Export-Import Bank
Like many other federal programs, the Ex-Im Bank has evolved considerably since the days of its formation. Created by President Franklin Delano Roosevelt in 1934, the bank’s original mission 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.” Conceived to provide immediate financing of trade with the Soviet Union, the bank was housed in various federal departments before the Export-Import Bank Act of 1945 officially established it as the independent agency it is today.
The act invested the bank with the power to “make loans, to discount, rediscount or guarantee notes, drafts, bills of exchange, and other evidence of debt, or participate in the same” to facilitate international trades for US businesses, and with the authority to “issue notes, debentures, bonds, or other obligations” for the Department of the Treasury to purchase. So long as the bank took care to “supplement and encourage, and not compete with, private capital” and provided an annual report to Congress on its operations, the federal government provided the bank with a capital stock of $1 billion and gave it the green light to pursue its mission.