The Export-Import Bank of the United States (Ex-Im Bank) is an independent, self-sustaining federal agency whose assistance is designed to help create and maintain US jobs by financing the sale of American exports, primarily to emerging markets throughout the world. The financial activity of Ex-Im bank consists of providing loan guarantees, export-credit insurance and direct loans—some of which are given to foreign businesses. The bank also has been known to help with the sale of equipment and technology that has aided the militaries of foreign governments with poor human rights records.
The bank was first created during the Great Depression to facilitate American exports to none other than the Soviet Union, but by the end of World War II, its mission had expanded to develop American export opportunities throughout the world. In recent years, Ex-Im Bank authorized between $12-$14 billion in financing to support US exports worldwide. During the first term of the Bush administration, the bank was reportedly pressured by the White House to help finance the completion of a controversial gas pipeline project in Peru which stood to benefit two US energy companies. Also, Ex-Im officials came under scrutiny from members of Congress for approving large loans to foreign companies that are aiding US enemies, such as Iran.
The Export-Import Bank of Washington was created in 1934 as part of a larger economic policy promoting government spending to facilitate economic growth. Created during the Great Depression, the bank was conceived to help resolve problems of high unemployment, low income, low demand for goods and services, and slowed industrial production. While the US was suffering through a dire economy, the Soviet Union was experiencing high industrial production from state-owned firms and zero unemployment. Under these economic conditions, the Soviet Union was seen as a market for US-produced goods, and the export of goods to the Soviet Union was seen as a reasonable strategy for promoting US economic growth and lowering unemployment.
Within a decade after its creation, the bank’s mission quickly expanded to include other foreign countries. By the end of World War II, the Export-Import Bank played a role in helping American companies participate in the expansion of US industry to Europe and Asia as part of the post-war reconstruction effort. Because of the expanding post-war role of the bank and its growing importance, Congress formally designated it an independent government agency when it adopted the Export-Import Bank Act of 1945.
A 1968 amendment to the Export-Import Bank Act of 1945 renamed the bank the Export-Import Bank of the United States (Ex-Im Bank). Before 1980, the main avenue of export promotion through the bank was by way of direct loans to companies seeking to sell goods abroad. This program provided fixed interest rate loans which were most often given to businesses to fund high capital (plant and equipment) expenditures in industries such as aircraft manufacture and nuclear power. Boeing was a major recipient of assistance from the bank in an effort by the US government to help the airplane manufacturer compete with Airbus, which received subsidies from the European Union.
In 1980, Congress limited the amount of direct lending by Ex-Im Bank, causing the bank to decrease its direct lending and increase its use of loan guarantees and insurance coverage as a means of facilitating the export of American goods.
During the 1980s, the Reagan administration sought to help the Saddam Hussein’s Iraq in its war against Iran through the exporting of “dual-use” technologies and equipment that could aid the Iraqi army without violating US laws. Officials in the White House, State Department and Pentagon discussed ways of financing these dual-use sales, including getting the Ex-Im Bank involved. But officials at the bank resisted being pulled into the scheme.
President George W. Bush signed the Export-Import Reauthorization Act of 2002 on July 14, 2002. This act renewed the bank’s charter through September 30, 2006 and included new rules for the provision of loans and insurance. The law now requires the bank to make a human rights assessment of any project over $10 million and to focus on projects that will promote US job growth. The law also draws attention to compliance with US responsibilities as a nation member of the World Trade Organization (WTO). The Export-Import Reauthorization Act of 2002 prohibits subsidization to any industry subject to a retaliatory countervailing duty through the WTO agreements.
The 2002 law was also supposed to prod the bank into providing more loans to small businesses. Congress called for the bank to give small companies from 10-20% of its total financing, but it didn’t put in place a structure to make that happen, and the bank never met the 20% goal from 2002-2006. So when lawmakers took up another reauthorization bill in 2006, they added more provisions to make sure the bank finally meets this goal.
The underlying goal of the Export-Import Bank of the United States is to promote the sale of US goods abroad. The bank provides loans and insurance to privately-owned companies to reduce the risk of selling in countries experiencing political or economic instability. In addition, the bank attempts to “level the playing field” of global markets for American companies by subsidizing US industries in competition with foreign firms subsidized by their governments.
Federal law states that the bank is supposed to supplement, and not to compete with, private capital available from other financing sources, and that Ex-Im loans should be for specific purposes and offer reasonable assurance of repayment. The bank is authorized to have capital stock of $1 billion and may have loans, guarantees, and insurance aggregating up to $40 billion outstanding at any one time.
Ex-Im Bank has initiated various programs designed to broaden the credit opportunities of US industry. It provides a direct-lending program to aid in large sales of US products, and it also makes available insurance and financial guarantees to assist exporters dealing with smaller sales of products and services. The bank has assisted in financing sales to foreign buyers of a wide range of American equipment, including fertilizer plants, bridges, jet aircraft, and locomotives. More examples are available through the bank’s published annual report.
While much of its financial activity goes toward helping American businesses and institutions sell US goods and services overseas, some of Ex-Im Bank’s commitments are given to foreign enterprises. For instance, direct loans are sometimes provided to foreign buyers with fixed-rate financing to help with their purchases from the United States. To qualify for Ex-Im Bank support, a product or service must have at least 50% US content and not affect the US economy adversely. The bank has also co-financed projects with the US Agency for International Development (USAID), the World Bank, and regional development banks.
Furthermore, assisting in the sale of American exports means not only promoting purchases such as automobiles or wheat, but also equipment with military applications. In the past, Ex-Im Bank has supported the sale of “dual use” exports—those with both military and civilian applications. Examples include loans given to Indonesia, Venezuela, and Brazil which were used to purchase equipment for their militaries, including aircraft, trucks, and radio systems. Also, some of the larger American recipients of Ex-Im Bank help have included defense contractors, such as Northrop Grumman.
For small businesses, the bank provides a special portal to obtain information on how to apply for assistance or loans.
The bank is managed by a bipartisan board of directors appointed by the president with the advice and consent of the Senate. There are also nearly 30 bank officers who carry out the day-to-day functions of the bank.
From October 2003 to September 2006, the Export-Import Bank of the United States published in its 2008 Annual Report (PDF) the estimated value of American exports assisted by the bank that benefited each state. The biggest winners were Washington ($28 billion), Texas ($10.5 billion) and California ($9.4 billion). The remaining states faired as indicated:
Over $1 billion
Florida ($4.3 billion)
Georgia ($1 billion)
Illinois ($2.1 billion)
Louisiana ($1.6 billion)
Maryland ($1 billion)
Massachusetts ($1.7 billion)
New Jersey ($2.3 billion)
New York ($3.9 billion)
Ohio ($1.3 billion)
Pennsylvania ($3 billion)
Over $500 million
Connecticut ($908 million)
Indiana ($559 million)
Michigan ($797 million)
Minnesota ($755 million)
North Carolina ($698 million)
Oklahoma ($502 million)
Over $100 million
Alabama ($403 million)
Arizona ($253 million)
Arkansas ($275 million)
Colorado ($400 million)
Delaware ($249 million)
Iowa ($112 million)
Kansas ($250 million)
Kentucky ($148 million)
Maine ($283 million)
Missouri ($285 million)
Nebraska ($194 million)
New Hampshire ($212 million)
Oregon ($173 million)
South Carolina ($331 million)
Tennessee ($333 million)
Virginia ($460 million)
Wisconsin ($359 million)
Over $10 million
Alaska ($11 million)
District of Columbia ($43 million)
Idaho ($56 million)
Mississippi ($89 million)
Montana ($30 million)
Nevada ($54 million)
North Dakota ($70 million)
Puerto Rico ($27 million)
Rhode Island ($38 million)
South Dakota ($12 million)
Utah ($95 million)
Vermont ($28 million)
West Virginia ($90 million)
Over $750,000
Hawaii ($860,000)
New Mexico ($3 million)
Wyoming ($780,000)
US Lawmakers Object to Bank’s Support of Iranian Fuel Purchases
A group of US Congressmen asked the Export-Import Bank in December 2008 to suspend $900 million worth assistance to Reliance Industries, an Indian conglomerate that’s helping supply Iran with gasoline. The letter also called on the bank to do a better job of ensuring that the projects it supports are not in conflict with US national interests. Ex-Im Bank has approved two separate loan guarantees worth $900 million, including a $400 million package in August 2008. Reliance has been a major supplier of refined petroleum products to Iran, and has at times provided as much as 30 % of Iran’s need for imported refined petroleum products.
“I very much support the Export-Import Bank’s mission of supporting US exports. However, we must ensure that when we provide assistance, the corporate recipients are not doing business with our enemies,” said Congressman Brad Sherman (D-CA). “We could greatly increase our leverage against Tehran in the dispute over its nuclear program by encouraging those supplying them with gasoline to halt their trade with Iran.”
Ex-Im Bank Caught in Middle of Peru Gas Project
A controversial $2 billion natural gas project sparked heated battles in Peru and the United States in 2003 that threatened to pull in the Export-Import Bank of the United States. The Camisea pipelines were being constructed between the Apurimac Reserve and Manu National Park, two of Peru’s most biologically diverse regions, raising the passions of environmentalists, indigenous rights leaders, and Peruvian officials. In the United States, critics were irate at the Bush administration for pushing for loans to finish the pipelines, a project they say will destroy jungles and indigenous cultures while enriching two Texas energy companies. The White House tried pressuring Ex-Im Bank officials to lend millions to complete the Camisea project by 2004 to help Hunt Oil, which had a major stake in Camisea, and Kellogg Brown & Root, then a subsidiary of Vice President Dick Cheney’s former company, Halliburton. KBR was a top candidate to build a $1 billion liquefied natural gas plant on the Peruvian coast. Ray Hunt, Hunt Oil’s chief executive officer, reportedly raised more than $100,000 for Bush’s 2000 presidential race. Hunt Oil broke ground on the plant in January 2006.
Congressman Labels Ex-Im Bank “Corporate Welfare”
Congressman Bernie Sanders (I-VT) lashed out at the Export-Import Bank of the United States in 2002, calling it “one of the most egregious forms of corporate welfare” in the country. He accused the bank of distributing more than 80% of its subsidies to Fortune 500 corporations, including Enron, Boeing, Halliburton, Mobil Oil, IBM, General Electric, AT&T, Motorola, Lucent Technologies, FedEx, General Motors, Raytheon, and United Technologies.
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Founded: 1934
Annual Budget: $14 billion
Employees:
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Export-Import Bank of the United States
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Lambright, Jim
Chairman and President
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A native of St. Louis, MO, Jim Lambright served as chairman and president of the Export-Import Bank of the United States beginning in July 2005, after serving as the bank’s executive vice president and chief operating officer. His term as chairman and president ended January 20, 2009.
Lambright received a bachelor of arts in linguistics from Stanford University, and graduated with honors from Harvard Law School.
Prior to joining Ex-Im Bank in 2001, Lambright worked for Credit Suisse First Boston Corp. in Los Angeles, where he was vice president of private equity. There, he specialized in the underwriting and negotiation of real estate and venture capital transactions.
On October 22, 2008, the Treasury Department named Lambright to serve as chief investment officer of the Troubled Asset Relief Program on an interim basis until the position was filled permanently.
Lambright is a term member of the Council on Foreign Relations and a Henry Crown Fellow of the Aspen Institute.
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In the wake of Bill Richardson backing out as Secretary of Commerce, gay activists lobbied Barack Obama to select Fred P. Hochberg as a replacement for the post—in the hope of finally having an openly gay member of a presidential cabinet. Instead, they had to settle for head of the Export-Import Bank of the United States for Hochberg, a multi-millionaire who has helped fill Democratic Party coffers with hundreds of thousands of dollars.
Hochberg was born in 1951 to Sam and Lillian Hochberg. His mother, born Lilly Menasche in Germany, founded a business the same year Hochberg was born: Vernon Specialties, a small home-based mail order company. In time, it grew into the $170 million-a-year Lillian Vernon Corp., and his mother changed her name to match that of the company.
Hochberg earned a BA from NYU (1974) and an MBA from Columbia University (1975) (and later attended the executive leadership program of the Kennedy School of Government at Harvard University). In 1973, he went to work for the family business, eventually rising to president and chief operating officer in 1989. He was credited with transforming the firm into a publicly traded corporation that Forbes described as “one of the great success stories of American entrepreneurship.”
Following his departure from Lillian Vernon in January 1993, Hochberg founded his own business: Heyday Company, a private investment firm managing real estate, stock market investments, and venture capital projects. He ran Heyday as president until 1998, when he was appointed deputy administrator for the Small Business Administration during the Clinton presidency. He eventually served as acting administrator of the SBA, along with being on President Clinton’s Management Council.
Upon Clinton’s departure from the White House in 2001, Hochberg returned to New York and became a senior advisor to Mario Cuomo’s campaign for governor of New York.
Two years later, in December 2003, he was named dean of New School University’s Robert J. Milano Graduate School of Management and Urban Policy. Milano describes itself as a graduate school that “trains leaders for the nonprofit, public, and private sectors” with a faculty that “blends theory with hands-on practice and progressive thinking with social commitment.”
Hochberg had been active in Democratic politics, and in 2004, he was a delegate from New York to the Democratic National Convention. He also raised $100,000 for John Kerry’s 2004 presidential run. During Hillary Clinton’s run for president in 2008, Hochberg was one of her top “bundlers” (fundraisers who gather contributions from many sources), reportedly raising $100,000 for her campaign. He later gathered together a similar amount for Obama after he won the Democratic nomination.
After the November 2008 election, Hochberg was selected to serve on Obama’s transition team, tasked with overseeing transition at the Small Business Administration as co-Lead of the SBA Review Team.
He currently sits on the boards of directors of the Citizens Budget Commission of New York, FINCA International microfinance, Fusion Telecommunications, Seedco, and the Howard Gilman Foundation, and is an appointed representative to the New York State Financial Control Board. Hochberg is currently a trustee of the Lillian Vernon International House at New York University, and in August 2008, he was appointed to the board of the New York City Port Authority. He also has served on the Democratic National Committee, on the board of Playwrights Horizon and the Wolfsonian Art Museum, and as co-chairperson of the Human Rights Campaign, the nation’s largest lesbian and gay civil rights group.
Hochberg lives in Manhattan with his partner, Tom Healy, a director of arts programs at Columbia University.
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