December 23, 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.
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, as non-OECD countries provide
financing through their ECAs and OECD members provide
certain forms of financing outside the Arrangement’s scope.
Figure 1. New Medium and Long-Term Official Export
Credit Volumes for Selected ECAs, 2013
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? The FY2015
continuing resolution (CR; Sec. 147 of P.L. 113-164)
extends Ex-Im Bank’s general statutory charter (ExportImport Bank Act of 1945, as amended) through June 30,
2015. Previously, the charter was to sunset on September
30, 2014. As the new sunset date approaches, Congress is
likely to debate whether to reauthorize Ex-Im Bank; if so,
under what terms; and if not, other policy alternatives.
What are statutory requirements for Ex-Im Bank’
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, it requires a
certain amount of U.S. content (85% for medium- and longterm 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 demanddriven, and its activity depends on alignment with
commercial interest and opportunities.
Source: Ex-Im Bank, 2013 Competitiveness Report, June 2014.
Notes: Data subject to analytic assumptions and other limitations.
OECD ECAs unregulated financing may be omitted.
What does its activity look like? According to Ex-Im
Bank, in FY2014, it authorized $20.5 billion in credit and
insurance transactions worldwide, to support an estimated
$27.5 billion of U.S. exports. U.S. small businesses account
for the majority of Ex-Im Bank’s transactions by number
(89%), while larger companies represent the majority by
dollar amount. In FY2014, the Bank’s worldwide exposure
reached a reported $112.0 billion, under the statutory limit
of $140 billion for that year (see Figure 2).
How does it manage risk? The Bank assesses credit and
other risks of proposed transactions, monitors current
commitments for risks, and maintains reserves against
losses. It reported a default rate of 0.175% as of September
2014 (provided quarterly to Congress), and, since 1992, an
average recovery rate of 50% for transactions in default.
What is its appropriation? The Bank’s revenues include
interest, risk premia, and other fees it charges for services.
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Export-Import Bank (Ex-Im Bank) Reauthorization
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 ExIm Bank to fund its operations; provide a direct
appropriation for its Office of Inspector General (OIG); and
allow it to retain funds for a period of time. For FY2015,
the Bank has an upper limit of $106.3 million for
administrative expenses, funding of $5.8 million for the
OIG, and up to $10 million in carryover authority until
September 30, 2018 (P.L. 113-235). Ex-Im Bank reported
providing $674.7 million to the Treasury in FY2014 after
covering operating expenses.
Figure 2. Ex-Im Bank FY2014 Exposure Composition
In the 113th Congress, the FY2015 CR includes an
extension of Ex-Im Bank’s authority through June 30, 2015.
This followed active debate about Ex-Im Bank’s
authorization status. Proposals in Congress included a
largely “clean” reauthorization of the Bank; reauthorization
with reforms; and termination of authority. The Obama
Administration’s April 2014 legislative proposal called for
a five-year renewal of the Bank’s authority and an increase
in its exposure cap to $160 billion by FY2018.
Reauthorization Issues for Congress
The primary issue is whether to reauthorize Ex-Im Bank.
Scenarios include renewing its authority, in a “clean”
manner or with reforms; allowing its authority to sunset;
and reorganizing its functions, such as merging with other
agencies. Renewal presents other issues, including:
• 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
and assure clients of the Bank’s 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;
implications for business, labor, environmental,
taxpayer, and other stakeholder interests; and adequacy
of reforms undertaken since the 2012 reauthorization.
• Financial soundness and risk management. Ex-Im
Source: Ex-Im Bank, FY2014 Annual Report.
Reauthorization Debate and Outcome
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 has been the outcome of recent debates? In the
112th Congress, 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 in FY2014, subject to conditions. It required
the 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 export credits.
Bank’s financial soundness is of increasing interest as
its exposure levels have grown. Congress may consider
the Bank’s credit standards, due diligence, and other
practices in terms of goals such as allowing 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. The growth in unregulated
financing raises questions about the effectiveness of the
OECD Arrangement. Some stakeholders support a focus
on bringing China and other non-OECD countries into
the Arrangement. Some also support U.S. and Chinese
efforts since 2012 to negotiate separate export credit
disciplines as part of an International Working Group.
Others call for a focus on U.S. efforts in the OECD and
other venues to negotiate to reduce and eliminate
government-backed export financing internationally.
See CRS Report R43671, Export-Import Bank
Reauthorization: Frequently Asked Questions, coordinated
by Shayerah Ilias Akhtar; and CRS In Focus IF00039,
Export-Import (Ex-Im) Bank and the Federal Budget (In
Focus), by Mindy R. Levit.
Shayerah Ilias Akhtar, email@example.com, 7-9253
www.crs.gov | 7-5700