Ex-Im Bank Essay ⋆ Business Essay Examples ⋆ EssayEmpire

The purpose of the Export-Import Bank of the United States (Ex-Im Bank) is “to assist in financing the export of U.S. goods and services to international markets.” The Ex-Im Bank provides export financing solutions that fill gaps in trade financing arising when the private sector is unable or unwilling to assume credit and country risks. The Ex-Im Bank also provides export financing that is competitive with the official export financing support offered by other governments to support U.S. exports and the jobs they represent. The Ex-Im Bank provides pre-export financing, export credit insurance, loan guarantees, and direct buyer financing loans. Since its charter in 1945, the Ex-Im Bank has supported more than $400 billion of U.S. exports in over 150 markets, mostly going to developing markets. Congress has mandated that the Ex-Im Bank’s financing is conditioned on not competing with the private sector and a reasonable assurance of repayment.

The Export-Import Bank of the United States was chartered under the Export Import Bank Act of 1945 (12 U.S.C. 635) as amended through Public Law 109-438 on December 20, 2006, and other relevant provisions updated on December 27, 2006. The Ex-Im Bank is an independent executive agency and a wholly owned U.S. government corporation. Congress periodically reauthorizes the Ex-Im Bank, as it did in 2006, extending its authority until September 30, 2011.

The Ex-Im Bank’s headquarters are in Washington, D.C., supported by seven regional offices around the country. The Ex-Im Bank is structured around 12 functional areas: the Board of Directors, the Office of the President, the Credit and Risk Management Group, the Export Finance Group, the Small Business Group, the Office of the General Counsel, the Office of the Chief Financial Officer, the Office of Policy and Planning, the Office of Resource Management, the Office of Communications, the Office of Congressional Affairs, and the Office of the Inspector General.

The Ex-Im Bank reports under U.S. generally accepted accounting practices applicable to federal agencies with form and content guidance provided by the Office of Management and Budget Circular A-136. The Ex-Im Bank reports its relative efficiency and effectiveness in an annual report to the U.S. Congress on Export Credit Competition, and in the Export-Import Bank of America competitiveness report. It compares its performance to the other G- 7 export credit agencies in terms of policy coverage, interest rates, exposure fee rates, and risk premiums. Additionally, the U.S. Congress established an advisory committee to help the Ex-Im Bank gain additional insight from various sectors of the economy and to review Ex-Im Bank policies and programs with respect to competitiveness. The Advisory Committee holds quarterly meetings.

The Ex-Im Bank has two strategic goals. The first strategic goal is to facilitate U.S. exports and their associated jobs, which represent over 11 percent of the U.S. gross domestic product. The second strategic goal is to facilitate U.S. exports by small businesses. The Ex-Im Bank’s charter requires than no less than 20 percent of the exports it finances be direct exports by small business concerns (as defined in section 3 of the Small Business Act). In addition to its strategic goals, the Ex-Im Bank is pursuing an initiative targeting sub-Saharan Africa as a priority region for its efforts in support of the African Growth and Opportunity Act. The Ex-Im Bank has identified the top 12

African markets for U.S. exports and is establishing a foundation for credit underwriting and transactions analysis by African financial institutions, as well as promoting the Ex-Im Bank’s products, methods, and standards.

In fiscal year 2007, the Ex-Im Bank approved 2,793 authorizations in the form of either guarantees or export credit insurance amounting to $12,569.4 million in support of exports with an estimated value of $16.041 billion. For fiscal year 2007, the Ex-Im Bank authorized 26.7 percent of its funding in support of direct small business exports.

The Ex-Im Bank’s exposure at the end of fiscal year 2007 was approximately $57,424.5 million. The Ex-Im Bank’s exposure in terms of economic sectors is as follows: the air transportation sector, 44.5 percent; oil and gas, 12.3 percent; manufacturing, 7.7 percent; power projects, 7.1 percent; and all other sectors, 28.4 percent of its total exposure. The Ex-Im Bank’s exposure in terms of geographic location is as follows: Asia, 29.2 percent; Latin America, 21.9 percent; Europe/Canada, 19.3 percent; Africa/Middle East, 13.5 percent; and all other locations, 16.1 percent of its total exposure.

Although normally the Ex-Im Bank denominates its financings in U.S. dollars, it does guarantee notes in certain other foreign currencies. Its total foreign currency exposure of $8,207 million represents approximately 14.3 percent of its total exposure. The bank classifies its credits into 11 categories (1 being the least risky) and maintains an overall risk rating of 4.00 on new authorizations. Over the past five years, the Ex-Im Bank has shifted its portfolio of borrowers toward private-sector borrowers (58 percent) from sovereign or public-sector borrowers.

Bibliography:

Export-Import Bank of the United States Annual Report 2007, www.exim.gov (cited March 2009);
S. Export-Import Bank Handbook (International Business Publications, 2007);
Wormell, “William H. Becker and William M. Mcclenahan, Jr., The Market, the State, and the Export-Import Bank of the United States,” Business History (v.47/1, 2005).

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