September 2, 2014
Export-Import Bank (Ex-Im Bank) Reauthorization
What is Ex-Im Bank? As the official U.S. export credit
agency (ECA), Ex-Im Bank finances and insures U.S.
exports of goods and services with the goal of supporting
U.S. jobs. On a demand-driven basis, it seeks to support
exports that the private sector is unwilling or unable to
finance alone at commercially viable terms for exporting;
and/or to counter government-backed financing offered by
foreign countries through their ECAs. The rationales behind
Ex-Im Bank’s activities are subject to congressional debate.
Ex-Im Bank Products
Direct loan: Fixed-rate loan to foreign buyers of U.S. exports—
usually capital-intensive exports (e.g., aircraft, mining equipment).
Loan guarantee: Guarantee to a lender that, if default by the
buyer, payment of outstanding principal and interest on the loan.
Insurance: Protects U.S. exporters against risk of loss from nonpayment should a foreign buyer or other foreign debtor default.
Working capital: Short-term, secured working capital loans and
guarantees, usually to small businesses.
Special financing programs: Focus on a particular industry or
financing technique, e.g., aircraft, project, and supply chain finance.
What is the congressional interest and state of play? ExIm Bank’s general statutory charter (the Export-Import
Bank Act of 1945, as amended) expires on September 30,
2014. Currently, Congress is considering whether to renew
Ex-Im Bank’s authority; if so, under what terms; and if not,
the possibility of other policy options. Proposals in the 113th
Congress include a largely “clean” reauthorization of the
Bank; reauthorization with reforms; and termination of
authority. The Obama Administration’s April 2014
legislative proposal calls for a five-year renewal of Ex-Im
Bank’s authority and an increase in its exposure cap (limit
on total outstanding credit and insurance) to $160 billion by
FY2018—up from the $140 billion cap for FY2014.
What are statutory requirements for Ex-Im Bank’s
support? Under its charter, Ex-Im Bank’s financing must
offer a “reasonable assurance of repayment” and should
“supplement and encourage, and not compete with, private
capital.” The Bank considers a proposed transaction’s
potential U.S. economic and environmental impact, among
other policy issues. Based on its jobs mandate, Ex-Im Bank
requires a certain amount of U.S. content (85% for
medium- and long-term transactions) for an export contract
to receive full financing from the Bank. In addition,
products generally must be shipped on U.S. flag vessels.
Congress further requires Ex-Im Bank to support certain
types of exports. For example, the Bank must make
available not less than 20% of its total authority to finance
small business exports, and not less than 10% to finance
renewable energy-related exports. It also must promote
financing to sub-Saharan Africa, but does not have a
quantitative target. While the Bank seeks to support these
export goals, it is demand-driven, and its activity depends
on alignment with commercial interest and opportunities.
What is the international context? Ex-Im Bank has many
foreign counterparts (see Figure 1). It abides by the
Organization for Economic Cooperation and Development
(OECD) Arrangement on Officially Supported Export
Credits (the Arrangement), which establishes disciplines on
the terms and conditions for government-backed export
financing, such as minimum interest rates, risk fees, and
maximum repayment terms. The Arrangement is intended
to ensure that price and quality, not financing terms, guide
purchasing decisions. Over time, unregulated ECA
financing has grown, with emerging economies that are not
a part of the OECD providing export financing through
their ECAs and OECD members providing certain forms of
export financing not regulated by the Arrangement.
Figure 1. New Medium- and Long-Term Official
Export Credit Volumes for Selected ECAs, 2013
Source: Ex-Im Bank, 2013 Competitiveness Report, June 2014.
Note: Data subject to analytic assumptions and limited by availability
of information. OECD ECAs’ unregulated financing may be omitted.
What does its activity look like? According to Ex-Im
Bank, in FY2013, it authorized $27.3 billion in credit and
insurance transactions worldwide (see Figure 2),
supporting an estimated $37.4 billion of U.S. exports. U.S.
small businesses account for the majority of Ex-Im Bank’s
transactions by number (89% in FY2013), while larger
companies represent the majority by dollar amount. In
FY2013, the Bank’s worldwide exposure, subject to a
statutory limit of $130 billion for that year, reached a
reported $113.8 billion—a record high following increased
demand after the 2008-2009 financial crisis.
How does Ex-Im Bank manage risk? Ex-Im Bank
assesses credit and other risks of proposed transactions,
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Export-Import Bank (Ex-Im Bank) Reauthorization
monitors current commitments for risks, and maintains
reserves against losses. It reported a default rate of 0.194%
as of June 2014 (provided quarterly to Congress). It also
has reported a recovery rate of 50 cents on the dollar on
average for transactions in default since 1992.
What is Ex-Im Bank’s appropriation? Ex-Im Bank’s
revenues include the interest, risk premia, and other fees it
charges for services. Such revenues in excess of forecasted
losses are recorded as offsetting collections. As part of the
annual appropriations process, Congress and the President
set an upper limit on the amount of these offsetting
collections available to Ex-Im Bank to fund its operations;
provide a direct appropriation for its Office of Inspector
General (OIG); and allow it to retain carryover funds for a
limited period of time. For FY2014, the Bank was provided
a limit of $115.5 million for administrative expenses,
funding of $5.1 million for the OIG, and up to $10 million
in carryover authority until September 30, 2017. Ex-Im
Bank reported providing $1.1 billion to the Treasury in
FY2013 after covering operating expenses and loan loss
in FY2014, subject to certain requirements. The legislation
also required Ex-Im Bank to monitor its default rate and
take specific action if it equals or exceeds 2%; develop
guidelines for its economic impact analysis; and review its
domestic content policy. Among other things, it also
required the Secretary of the Treasury to negotiate
internationally to reduce and eliminate government-backed
Reauthorization Issues for Congress
The issues facing Congress are twofold. The first issue is
whether to renew Ex-Im Bank’s authority. Scenarios
include a “clean” reauthorization or reauthorization with
reforms; a sunset in authority (raising questions about the
“winding down” of its operations); and a reorganization of
its functions (such as consolidation with other trade
agencies). Second, should Congress choose to reauthorize
Ex-Im Bank, possible issues include:
Length of reauthorization. Shorter extensions of
authority in the past arguably have given Congress the
opportunity to weigh in more frequently on Ex-Im
Bank operations through the lawmaking process, while
longer extensions could enhance the Bank’s long-term
planning ability and provide more assurance to clients
of its viability.
Policies. Possible revisions to Ex-Im Bank’s policies
could be viewed in the context of the agency’s
effectiveness and efficiency in meeting its statutory
mandate and other requirements; the competitiveness
of its policies relative to those of foreign ECAs; and
implications of any changes for balancing business,
labor, environmental, taxpayer, and other stakeholder
Financial soundness and risk management. Ex-Im
Bank’s increased exposure levels have heightened
congressional interest in Ex-Im Bank’s financial
soundness. Congress may consider the balance between
ensuring that Ex-Im Bank’s credit standards, due
diligence, and other practices allow the Bank to
prudentially manage risk and minimize potential
taxpayer losses, while enabling it to take on appropriate
risks to meet its U.S. exports and jobs mandate.
International disciplines. For some stakeholders, the
growth in unregulated financing has raised questions
about the OECD Arrangement’s effectiveness. It also
has prompted consideration of efforts to bring China
and other non-OECD countries into the Arrangement,
as well as U.S. efforts to negotiate separate export
credit disciplines with China. Others call for a focus on
U.S. efforts to reduce and eliminate governmentbacked export financing through international
negotiations in the OECD and other venues.
Figure 2. Ex-Im Bank Activity Composition, FY2013
Source: Ex-Im Bank, FY2013 Annual Report.
What is the general debate? While Congress has renewed
Ex-Im Bank’s authority many times, reauthorization is
subject to increasing debate—coinciding with questions
over the role of the U.S. government in supporting exports,
the appropriate size and scope of the government, and other
issues. Proponents contend that the Bank supports U.S.
exports and jobs by filling in gaps in private sector
financing and helping U.S. exporters compete against
foreign companies backed by their ECAs. Critics contend
that it crowds out private sector activity, picks winners and
losers through its support, operates as a form of corporate
welfare, and poses a risk to taxpayers.
What was the outcome of the 2012 reauthorization
debate? In the 112th Congress, after active debate,
legislation (P.L. 112-122) was passed on a bipartisan basis
(House vote 330-93; Senate vote 78-20) to extend Ex-Im
Bank’s authority through FY2014 and incrementally
increase its exposure cap from $100 billion to $140 billion
For more information, see CRS Report R43671, ExportImport Bank Reauthorization: Frequently Asked Questions,
coordinated by Shayerah Ilias Akhtar; and CRS In Focus
IF00039, Export-Import Bank (Ex-Im) and the Federal
Budget, by Mindy R. Levit.
Shayerah Ilias Akhtar, firstname.lastname@example.org, 7-9253
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