The U.S. Export-Import (EXIM) Bank is the official export credit agency of the United States. While it is meant to support the American economy, some people have criticized it as hampering the free trade market. According to the EXIM Bank website, this executive branch agency’s primary purpose is facilitating exports from U.S.-based companies.
The EXIM Bank provides export-import bank financing for American exporters. In some cases, it can cover the pre-export costs of sending goods overseas, the costs of recovering inventory after busy seasons, and security against foreign buyer nonpayment. Whatever the case may be, the EXIM Bank aids American business interests in the international trade market.
Early Days of the EXIM Bank
An executive order issued by President Franklin D. Roosevelt created the EXIM Bank in 1934 as an early part of his New Deal. At the time, the primary goal was to create loans for the Soviet Union. During its early years, the EXIM Bank helped establish steady trade with Cuba and other nations across the globe. Eventually in 1945, Congress declared the EXIM Bank an independent agency, and it received its current name, the “Export-Import Bank of the United States” in 1968.
The main reason that the Export-Import Bank became an independent agency in 1945 was to increase the organization’s lending capacity. This was critical at the time for facilitating rebuilding efforts in Europe after World War II. The EXIM Bank was able to aid reconstruction in the countries devastated by the war and rebuild their importing and exporting industries.
Recently there was a lapse in congressional authorization for the EXIM Bank. In 2012, it was given another three-year term, but once that ended in 2015, the Export-Import Bank was left to manage its active accounts and could not take on any new business. After five months, Congress reauthorized the bank with a vote of 313 to 118, and that term lasts until 2019.
Criticisms of the EXIM Bank
When President Barack Obama gave his support for reauthorizing the EXIM Bank in 2012, he said it was going to help American businesses and increase the reach of American goods and services across the world. In a post-recession economy, this sounds like a excellent thing, but President Obama received a great deal of criticism for his support of the EXIM Bank due to that fact that during his initial presidential campaign in 2008, he called the EXIM Bank a fund for corporate welfare.
Many believe the bank’s ability to borrow money at government rates hurts taxpayers. Some economists claim the bank is not self-funding at all and that it doesn’t consider the proper metrics when reporting its deposits to the U.S. Treasury. While the exact effectiveness of the EXIM Bank may be difficult to ascertain, the total amount of outstanding credits it held climbed from $51.4 billion in 2007 to $134 billion in 2014.
