Export-Import Bank of the United States - Business in United States of America
Identification: Federal agency charged with financing and insuring foreign purchases of American commodities
Date: Established in 1934
Significance: The Export-Import Bank of the United States helps encourage and maintain trade between the United States and other nations by reducing the risks associated with that trade. The bank guarantees transactions that are too risky for commercial banks but that still have a reasonable assurance of repayment, thereby helping maintain employment in the U.S. manufacturing and agricultural sectors.
Since its inception, the Export-Import Bank of the United States (Ex-Im Bank) has struggled to strike a balance between its financial responsibilities and its foreign policy responsibilities. Various presidential administrations have used the bank’s credit facilities to increase American power and influence abroad. The bank was originally chartered to facilitate trade between the United States and the newly recognized Soviet Union, as well as between the United States and Cuba. These attempts at fostering international trade and diplomacy were not successful, so the trading focus of the bank quickly became more global. Prior to the beginning of the Marshall Plan, President Harry S. Truman used the bank to supply capital to rebuild Western Europe after World War II. President Lyndon B. Johnson used the bank to finance development projects in Latin America as a way to counteract Soviet influence in the region during the 1960’s.
Until the 1970’s, the bank relied on U.S. Treasury funds to finance its credit activities. Since then, the bank has shifted its focus to work with commercial banks both in the United States and abroad to share risk and ensure repayment.
During the 1990’s, the bank provided development funds to start private companies in the recently collapsed Soviet Union, when commercial lenders refused to lend without a certainty of repayment. When Asian economies declined during the late 1990’s, the bank provided substantial short term credit for customers to continue to purchase U.S. goods.
The Export-Import Bank, while undeniably helping foster international trade and American influence abroad, is not without its critics. Many of the U.S. exporters it has helped are giant, profitable defense contractors such as Boeing, Lockheed, and General Electric, whose foreign sales were essentially subsidized by U.S. taxpayers through the bank. In the past, the bank has also helped guarantee financing for gigantic development projects without due regard to the environmental impact of those projects. In response to criticism, the bank has come to emphasize U.S. export transactions that more directly benefit smaller U.S businesses.
Baker, James C. Financing International Trade. Westport, Conn.: Praeger, 2003.
Becker, William H., and William M. McClenahan, Jr. The Market, the State, and the Export-Import Bank of the United States, 1934-2000. New York: Cambridge University Press, 2003.
Hufbauer, Gary Clyde, and Rita Rodriguez, eds. The Ex-Im Bank in the Twenty-First Century: A New Approach? Washington, D.C.: Institute for International Economics, 2001.
See also: U.S. Agency for International Development; arms industry; Asian financial crisis of 1997; Asian trade with the United States; First Bank of the United States; Second Bank of the United States; banking; insurance industry; Military-industrial complex.
Second Bank of the United States: McCulloch v. Maryland
Second Bank of the United States: Panic of 1819
U.S. Agency for International Development: History of U.S. Foreign Aid and USAID