As lawmakers prepare for recess ahead of midterm elections, Congress voted on Sept. 17 to reauthorize the Export-Import Bank, extending funding until June 30, 2015. The Ex-Im Bank—whose authorization was set to expire on Sept. 30—has been the official export credit agency of the United States for 80 years. It provides financing guarantees to small and large U.S. businesses, helping turn export opportunities into sales.
The overwhelming majority of U.S. export transactions are backed by traditional lenders; the Ex-Im Bank takes on the remaining 2 percent that the private sector cannot or will not back due to regulatory constraints, customer demands or banks’ inability to assess overseas risk. Since its establishment, Ex-Im has supported more than $567 billion of U.S. exports, mostly to developing markets.
Critics in Congress say the bank is an example of crony capitalism, likening its loans to subsidies. Meanwhile, supporters consider Ex-Im vital to the U.S. economy, citing the fact that some 90 percent of its transactions in 2013 provided working capital to small businesses.
By law, the Ex-Im Bank cannot compete with commercial lenders. Ex-Im’s credit insurance provides PNC, Wells Fargo, Bank of America and other lending institutions some support to finance U.S. companies exporting abroad. Ex-Im also offers direct loans and insurance for the purchase of American goods by foreign buyers, often in Latin America, sub-Saharan Africa and other developing markets where local banks can’t always meet the needs of local businesses.