The Export Import Bank Concerns

The Export- Import Bank of the United States was established in 1934 by Franklin D. Roosevelt to support the foreign policy and aid the financing of exports and imports.

It is the official export credit agency for the United States federal government, which supports companies with purchasing American products, thus supporting the U.S. economy to grow and prosper. The Export-Import Act made substantial impact in the states during the rough times of the Great Depression, WWI, and WWII. The bank was originally a government agency but became an independent agency in 1945, but maintains their principles as to not compete with other private lenders or credit agencies.  

The bank today provides a number of services, such as capital guarantees, also known as pre-export financing, export credit insurance, loan guarantees and direct loans. In whole, the transactions usually directly benefit small U.S. businesses by providing the export financing needed for their products, but the bank is available for all types of businesses such as aircraft, power plants, engineering equipment, industrial equipment, locomotive cars, automobile parts, pharmaceuticals, etc.

In the past the Export- Import Bank has received censure for their ties with aviation due to the close relationship aviation has with the government. The complaints were said allegations against the bank’s performance towards favoring heavily government-subsidized companies in comparison to the Joe Shmoe United States taxpayer. The fact of the matter is the aviation depends on the Export- Import bank to finance the leasing and sales of aircraft, manufacturing equipment, and maintenance parts. As we are all well aware aviation is an extremely expensive business. Therefore, if the Ex-Im Bank is supporting the sales of aircraft to other countries we are looking at anywhere from a couple million to a couple hundred million per aircraft figure.

The Export-Import Bank has a lending cap where if and when reached is the end of the financing services that being said it is clear to see why there would be some complaints from smaller business holders on the larger subsidized companies taking all the financial benefit essential starving the small companies of business. The bank has doubled its financial support over the past four years as the economy has been struggling through a rough patch. Recently though there has been another downfall for the Export Import Bank as the $100 billion lending cap is fast approaching and projected to be reached in the next couple months. The bank has asked Congress  to raise its financial limit, as there are more pros to their existence than cons. Congress has been evaluating and arguing the future of the bank as Republicans push to eradicate the bank. Opposing the motion, the Democrats are finding ways to expand and reauthorize the bank.

The issue is thick in the news today for the wide relevance it has on the general public. The Export-Import Bank finances mainly loans to small business but the large transactions support major manufacturers. Boeing is the banks top beneficiary as the bank finances billions to Boeing annually and will radically impact the company and the industry if there is no supportive financing. Thus understandably Boeing supports the proposal to congress to raise the lending cap. On the other hand, the Air Transport Association of America (ATA) is against the increase and has been raising concern for the U.S. airlines future due to recent decisions made by the Ex-Im Bank in financing recent aircraft orders. In November ATA filed a complaint against the Bank for violating provisions in the Export Import Act or 1945 within a contract with Air India. The U.S. District Court denied the motion but ATA is still fighting allegations against the Export Import Bank.

To find out more about the Export-Import Bank of the United States please visit their website.