Ex-Im Bank: A Vital Tool for Exports, Growth, and Jobs

May 7, 2013

Export-Import Bank Chairman Fred Hochberg. Photo: Andrew Harrer/Bloomberg

A year ago this month, large bipartisan majorities in Congress approved legislation reauthorizing the Export-Import Bank of the United States (Ex-Im). Today, the Senate Banking Committee held a hearing with Fred Hochberg, who has been re-nominated for a second term as the Bank’s chairman.

Some who have criticized Ex-Im are seeking to re-open the debate over the Bank. But the facts show Ex-Im is playing a vital role in helping American companies compete in the global marketplace.

Last year, Ex-Im supported export sales that sustained nearly 255,000 American jobs at 3,400 companies. Ex-Im is especially important to small- and medium-sized businesses, which account for more than 85 percent of Ex-Im’s transactions. Tens of thousands of smaller companies that supply goods and services to large exporters also benefit from Ex-Im’s activities.

Unilateral disarmament is never a good idea, but that’s what efforts to hobble Ex-Im would accomplish. Because other countries are providing their own exporters with an estimated $1 trillion in export finance -- often on terms more generous than Ex-Im can provide -- American companies would be left at a sharp disadvantage without Ex-Im.

Relative to the size of their economies, European governments provide three times as much official trade finance to their exporters as Ex-Im does. China and India provide four times as much. Without Ex-Im’s help, U.S. firms risk being left in the dust.

American taxpayers can cheer the fact that Ex-Im regularly helps reduce the federal deficit by hundreds of millions of dollars. Far from being a subsidy for corporations, Ex-Im charges fees for its services that generated more than $1 billion in revenue for the U.S. Treasury last year alone.

Further, Ex-Im loans expose the U.S. taxpayer to little risk because they are backed by the collateral of the goods being exported. Borrowers have defaulted on less than 2 percent of all loans backed by Ex-Im over the past eight decades, a default rate lower than commercial banks.

At a time when polls show jobs are the top priority, efforts to hobble Ex-Im will quickly hit the headlines as export deals are lost to third-country competitors -- with American jobs disappearing in the bargain. We can’t let that happen.

 

 

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