The FACTS about Ex-Im Bank
The Export-Import Bank (Ex-Im Bank) has the mission of supporting U.S. jobs through exports. It currently is operating with a lending cap of $120 billion. Under provisions of its Congressional charter the cap will gradually increase to $140 billion over the next three years as the Bank complies with certain requirements; the increase will enable the Bank to strengthen U.S. businesses and support an additional 1.3 million jobs.
In addition to supporting U.S. jobs, the Ex-Im Bank is a self-sustaining agency that operates at no net cost to the taxpayers. Ex-Im Bank pays for itself by charging fees or interest to its customers for loans, credit insurance and loan guarantees that they receive. Over the past five years, Ex-Im Bank has generated $1.9 billion in excess revenue for the U.S. taxpayers.
Facts about Ex-Im Bank | Background Information | Facts about Petrobras loan | Facts about PEMEX loan
Facts about Ex-Im Bank
- Question: Does Ex-Im Bank provide subsidies to American export companies and their foreign customers?
Answer: No. Ex-Im Bank does not provide subsidies or grants to any companies, governments or financial institutions. The Bank simply does not provide subsidies. Rather, just like in the private sector, Ex-Im Bank charges fees or interest to its customers for the loans, credit insurance and loan guarantees that they receive. The fees (and interest payments in the case of direct loans) pay all of the Bank's cost of operations and establish the reserve accounts from which the Bank pays claims and recoups bad loans.
- Does Ex-Im Bank provide “corporate welfare”?
Answer: No. Far from being "corporate welfare", the companies that receive Ex-Im Bank export-financing support pay fees as they would in the private sector. Those fees have paid for all Bank operations and payments of claims. Because the Bank's loan loss rate has since 1934 been below two percent, Ex-Im earns more than cost of operations and costs of bad loans, so it actually earns a profit for U.S. taxpayers, $1.9 billion in the last five years alone.
- Question: Ex-Im Bank claims it is needed because it provides financing in markets where commercial banks are unwilling or unable to conduct business. If private financial institutions won't offer financing in certain markets why should the U.S. taxpayers? Isn't this similar to the risk to taxpayers assumed with Fannie Mae and Freddie Mac?
Answer: No. Comparing the Bank to Freddie Mac and Fannie Mae is misleading to say the least. Ex-Im Bank's portfolio is spread across over 170 countries and dozens of industries. U.S. taxpayers "own" the Bank ---it has no shareholders, and the employees are not eligible for extravagant bonuses. As proof of Ex-Im's low risk operations, during its 78-year history the Bank's loan loss rate has remained below 2 percent.
In fact, for the first half of Fiscal Year 2012, the Bank has earned interest and fees totaling $548 million compared to $18 million paid in claims.
Ex-Im Bank currently has a loan loss reserve account of over $4 billion.
Furthermore, far from creating losses Ex-Im Bank has earned for taxpayers $4.9 billion since 1992. In that time, every claim has been paid using the fees collected from Ex-Im customers.
- Question: Has the Bank provided financing, and lost money, by providing export financing to Enron?
Answer: No. Ex-Im Bank has never provided financing to Enron. Ex-Im did provide export financing support to the company's foreign customers who purchased services or products from Enron. Far from losing money on those transactions, the Enron loans were paid in full as required and the Bank collected more than $119 million in fees and interest for the U.S. taxpayers.
- Question: Has the Bank provided financing, and lost money, by providing export financing to Solyndra?
Answer: No. Ex-Im never gave financing to Solyndra. Ex-Im provided a loan guarantee to a Belgian bank that in turn financed the purchase of solar panels from Solyndra. The order was shipped and panels installed on the buyer's warehouse in Belgium. The Ex-Im loan guarantee became operative only after the installation was complete and accepted by the buyer.
Ex-Im bank has no exposure to Solyndra (it never did) - but, rather to the Belgian buyer. The Belgian Bank, KBC Bank NV, is paying fees for Ex-Im's loan guarantee. So, once again, Ex-Im made a profit for the taxpayer. The Belgian buyer has made all payments to the Belgian guaranteed lender, as required, and Ex-Im has collected over $300,000 in fees.
- Question: Why did Ex-Im Bank provide export financing to Gamesa, a Spanish company, to sell wind power equipment to Honduras.
Answer: Ex-Im Bank's mission is to help create and maintain the jobs of American workers by providing export financing support to companies in the United States that are selling American-made products and services to foreign customers. The ownership of the company is not relevant to the Bank's decision to provide financing as long as American workers are producing the exports and the sale meets all other Bank requirements.
In this particular transaction, as the U.S. subsidiary of a Spanish company, Gamesa Wind US LLC, a wind-turbine manufacturer headquartered in Langhorne, Pa., exported equipment and services for the Cerro de Hula Wind Farm, the first utility-scale wind project in Honduras, with the support of project financing from the Export-Import Bank of the United States (Ex-Im Bank). The wind farm will be the fourth largest power generator in Honduras, producing about 6 percent of the country's power.
- Doesn't Ex-Im Bank financing distort markets?
Answer: No. All major exporting countries, including the fiercest competitors in a global market, have export credit agencies that support their countries' exports. Ex-Im steps in, when requested, to help level the playing field to support U.S. companies so they can match competition from foreign companies.
- Question: Does Ex-Im Bank compete with private sector export financing?
Answer: No. The vast majority of export financing continues to be provided by private sector lenders. On average, Ex-Im Bank actually provides export-financing support for only about two percent of total U.S. exports. But the transactions for which the Bank does provide support are those that would otherwise go to foreign competitors absent the Bank's participation. These transactions come to Ex-Im for various reasons, including lack of commercial lender liquidity, or discomfort with the risks of lending to foreign buyers without Ex-Im support.
- Question: When Ex-Im Bank provides export financing for some companies and not others is it picking "winners" and losers?
Answer: No. Far from picking winners and losers, Ex-Im Bank loan guarantees simply ensure that the United States has a chance to have winners in the international marketplace.
The Bank is a demand-driven organization. U.S. exporters choose whether to request export financing from the Bank, not the other way around.
When a customer approaches us, we ask just two fundamental questions:
- One, will the loan be repaid? and
- Two, is our financing essential to make this sale happen?
If the answer is yes, the financing is approved.
There are no "losers" in an Ex-Im Bank transaction, and Ex-Im Bank does not favor or prioritize any parties.
- Question: Does Ex-Im Bank ignore its legal requirement to analyze the impact of its financing transactions on American jobs?
Answer: No. The Bank evaluates the potential for adverse economic effect of every transaction it considers. It does so through its Economic Impact Procedures (EIPs), which have been published for decades. The EIPs reflect both the requirements of the Charter and the Bank's decades-long expertise in analyzing affected economic sectors to assess whether Ex-Im Bank's support for exports is likely to affect other parties or sectors in the United States.
- Question: Is Ex-Im Bank really “Boeing's Bank” as some are calling it?
Answer: No. Ex-Im Bank is the United States' official export credit agency. In FY'11 Ex-Im Bank supported 290,000 export-related jobs at companies across the United States representing dozens of industries. Eighty-seven percent of last year's transactions directly benefited small businesses, adding up to a record $6 billion in export-financing support. Boeing is the nation's largest exporter and Ex-Im Bank is proud to support the thousands of jobs maintained with the sale of each aircraft. In FY '11 Ex-Im supported about $11 billion worth of large commercial sales of Boeing aircraft which helped employ approximately 85,000 American aerospace workers - and also supported tens of thousands of workers at small- and large-sized businesses that supplied parts and services to Boeing. Ex-Im Bank support for Boeing sales is essential to Boeing's direct competition with Airbus. Any restrictions or burdens placed on Ex-Im aircraft transactions would tilt the competition squarely in favor of Airbus, to the detriment of U.S. jobs.
- Question: What was the outcome of the lawsuit filed against Ex-Im by Air Transport Association?
Answer: On Wednesday, July 18, 2012 the U.S. District Court for the District of Columbia granted summary judgment to Ex-Im Bank in the lawsuit filed by Air Transport Association (ATA) and other parties. The suit was commenced by ATA in November 2011 in a bid to stop the Bank from providing its previously authorized guarantee for the sale of U.S. manufactured commercial aircraft to Air India.
The U.S. District Court upheld the decision of the Bank’s Board of Directors authorizing such guarantees. Ex-Im is pleased that the court ruled in the Bank’s favor, and we look forward to continuing to work on behalf of America's workers, companies and small business owners.
- Question: Is it true that Ex-Im Bank has made loans to individuals involved with the Mexican drug cartel?
Answer: No. This allegation was made in 2007, without substantiating evidence, in a television news report. It was investigated by law enforcement authorities and has never been substantiated.
- Is it true that Ex-Im Bank provided financing for exports of U.S. motion pictures? Did the Bank lose money doing so?
Answer: In 2002, Ex-Im Bank guaranteed financing to support the production of four U.S. independent films under a program that promoted more U.S.-based film production and preserved entertainment jobs in the United States. Unlike major studios, which can finance their own productions, independent film producers rely on bank loans for which foreign distribution contracts serve as collateral.
The loans were paid off as required and Ex-Im sustained no losses. The Film Production Guarantee Program was subsequently ended.
Facts About Ex-Im Bank Loans To Support Petrobras's Purchases of Goods and Services Made by American Workers - updated 5/27/11
THE OPPORTUNITY: PETROBRAS PLANS TO SPEND $175 BILLION TO DEVELOP ITS OFF-SHORE OIL FIELDS
In April 2009, Ex-Im Bank formally offered to consider up to $2 billion in financing to secure the purchase of U.S. goods and services by Petroleo Brasileiro S.A. (Petrobras), Brazil's national oil company. Ex-Im Bank told Petrobras it would consider increasing its offer above $2 billion if requested. Potentially, Petrobras $2 billion of purchases financed by Ex-Im Bank will help create and maintain over 16,000 American jobs.
OVER $300 MILLION EX-IM BANK CREDIT GUARANTEE SUPPORTS EXPORT SALES BY ABOUT 150 U.S. COMPANIES
To date, Ex-Im Bank has approved a request from JP Morgan Chase, acting as lender, for a more than $300 million, medium-term guarantee. This facility was made operative on May 27, 2011 and is being used to finance the Petrobras's general purchases of U.S. manufactured oil and gas equipment and services.
Here are some of the approximately 150 U.S. companies whose export sales are being supported by the Ex-Im Bank loan guarantee (partial listing):
Company |
Location |
Solar Turbines |
San Diego, CA |
Edison Chouest |
Galliano, LA |
Otto Candies |
Des Allemands, LA |
Seal-Tite |
Madisonville, LA |
Electro-Motive Diesel |
LaGrange, IL |
National Oilwell Varco |
Houston, TX |
Landmark Graphics |
Houston, TX |
Dresser Rand |
Houston, TX |
GE Packaged Power |
Houston, TX |
FMC Technologies |
Houston, TX |
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CHARGES AND FACTS:
Charge: The U.S. government is giving away more than $2 billion in taxpayer dollars to Brazil's largest oil and gas company to drill for oil in Brazil.
Fact: The Bank has established a $2 billion financing opportunity for Petrobras to use solely for the purchase of American-made goods and services. So far, Ex-Im has approved $300 million to finance Petrobras' purchase of U.S. oil and gas equipment and services.
The funds go to American exporters as payment for their sales to the Petrobras.
If Petrobras fails to award contracts to U.S. companies for the remaining amount, it will not access those dollars.
Of note, the Bank is self-sustaining and no taxpayer dollars are involved.
Charge: The loans to Petrobras represent a giveaway of U.S. tax dollars.
Fact: Ex-Im is a self-funding, independent agency which operates at no cost to the taxpayer. Ex-Im does not make grants, and charges fees and interest for the financing it provides. In fact, since 2006 the Ex-Im Bank has generated more than $3.4 billion in revenue for U.S. taxpayers.
Charge: America is exporting jobs to Brazil as a result of the loans.
Fact: Only American made goods and services qualify for Ex-Im Bank loans or guarantees.
Ex-Im Bank only supports U.S. jobs by providing financing to ensure that American goods and services can compete on a level playing field against foreign competition.
Charge: The loan to Petrobras represents a reversal of the Obama Administration's policies on off-shore drilling.
Fact:There is no connection between federal policies on offshore drilling in U.S. waters and financing U.S. export sales for drilling by other countries. In fact, should Ex-Im Bank refuse to finance sales by U.S. companies it is likely that the sales will go instead to their foreign competitors.
It is notable that the Bank's bipartisan Board of Directors unanimously approved the preliminary commitment to Petrobras on April 14, 2009, before any Obama appointees joined the Bank. In fact, at the time the Bank's Board consisted of three Republicans and two Democrats, all of whom were appointed by President George W. Bush.
Facts About Ex-Im Bank Financing Provided to PEMEX For the Purchase of U.S. Produced Goods and Services - updated 9/22/10
- Did your bank loan more than $1 billion to PEMEX in 2009 to support the company's oil drilling in the southern Gulf of Mexico and is set to loan another $1 billion in 2010?
In Fiscal Year 2009, the Bank approved $1.05 billion in direct loans and also guaranteed two loans, made by a commercial lender, totaling $300 million to support the sale of U.S.-produced goods and services.
Another $1 billion in loan guarantees is currently pending Ex-Im Board approval by the end of Fiscal Year 2010 (September 30th).
Before deciding whether to approve applications for financing, Ex-Im Bank performs rigorous environmental, safety and financial due diligence activities, including on-site inspections. After financing is approved the Bank monitors the company's financial, environmental and safety activities and performs on-site inspections as often as twice a year.
- Why is Ex-Im Bank giving money to PEMEX when our deficits are so high?
Ex-Im Bank is loaning money to PEMEX, a company with a flawless record of repaying over $7 billion of loans previously guaranteed by the Bank. PEMEX has always paid its obligations connected with Ex-Im Bank financing on-time.
PEMEX uses the proceeds of the Ex-Im Bank financing to buy U.S. goods and services produced by American workers, which is at the heart of the Bank's mission to keep American export workers employed.
It's important to note that Ex-Im Bank receives no taxpayer funds from Congress. The Bank is totally self-sustaining, paying all of its expenses from the fees and interest that it collects. In fact, since 1992, Ex-Im Bank has given U.S. taxpayers about $5 billion in excess of the cost of Bank operations.
- How many projects will the 2010 loans fund and is part of the agreement to have PEMEX employ U.S. oil contractors and engineers for both on-shore and off-shore oil production?
By law, Ex-Im Bank financing is directly tied to the export of goods and services produced or provided by American workers.
The 2010 requests will support both on- and off-shore PEMEX activities, including acquisitions connected with their Cantarell project area, the Strategic Gas Program (Spanish acronym "PEG"), new projects of PEMEX Exploration and Production (PEP), a PEMEX subsidiary, for New Pidiregas Projects (NPP), and a $200 million facility to finance PEMEX's purchases from U.S. small businesses. None of these projects involve deep water drilling.
- Why can't PEMEX get loans from commercial lenders?
Because of the global financial crisis commercially-available loans are often not readily available, so many foreign buyers are turning to export credit agencies, of which Ex-Im Bank is one, to provide loans or loan guarantees. Ex-Im Bank's role is to supplement commercial lenders when they are unable or unwilling to finance otherwise commercially-viable transactions.
Without Ex-Im Bank export credit financing, PEMEX might be forced to buy products or services from competitors in other countries with financing from their export credit agencies, thereby depriving U.S. companies of the orders and costing U.S. workers their jobs
- Did PEMEX as part of the 2009 loan agreement agree to contract with American firms and purchase equipment from American manufacturers in exchange for the money?
By law, Ex-Im Bank financing is directly tied to the export of goods and services produced or provided by American workers.
Since 1998, Ex-Im Bank financing for PEMEX's purchases of U.S. goods and services has helped create or sustain the jobs of over 47,000 American workers at over 1,300 U.S. companies, including 915 small businesses and 400 large companies.
- Was PEMEX your largest borrower in 2009?
Yes.
- Has PEMEX borrowed $8.3 billion from the government since 1998?
No, PEMEX has borrowed $1.05 billion directly from Ex-Im Bank. The Bank has provided loan guarantees to U.S. and international banks totaling $7.70 billion for loans they have made to PEMEX.
PEMEX, which has always repaid the loans on time, sought direct lending from Ex-Im Bank in Fiscal Year 2009 due to the reduced availability of funds from commercial lenders as a result of the international financial crisis. This loan supported the purchase of U.S. goods and services.
- Did one loan worth $600 million finance the development of 18 oil and natural gas fields in the Bay of Campeche in the southern Gulf of Mexico and another $300 million loan fund the building of oil production facilities in Mexico's Cantarell offshore oil field?
- Was the $900 million in loans given to Pemex in April of 2009?
- Was there another $150 million in loans in May 2009 to support PEMEX's strategic gas program?
Answer to questions 8, 9, 10
In Fiscal Year 2009, Ex-Im Bank approved $1.05 billion in direct loans and also guaranteed two loans totaling $300 million made by a commercial lender, to support the sale of U.S.-produced goods and services. Included in these amounts were a $600 million direct loan for activities at New Pidiregas Projects (NPP), and $300 million direct loan for activities at the Cantarell offshore oil field. A $150 million direct loan was also approved in Fiscal Year 2009 for acquisitions of U.S. goods and services in connection with PEMEX's Strategic Gas Program (PEG).
In total, Ex-Im Bank supported a total of $1.35 billion in loans and loan guarantees to support the sale of U.S. goods and services produced by American workers in 2009.
- Why should the taxpayer pay to provide these loans?
Actually taxpayers do not pay anything for either the loans that foreign buyers receive or the operation of Ex-Im Bank. The companies that receive Ex-Im Bank financing pay for that financing through the fees and/or interest that they pay.
The revenue earned by the Bank pays for all of the costs of operating the Bank. In fact, since 1992, Ex-Im Bank has given U.S. taxpayers about $5 billion in excess of the cost of Bank operations.
BACKGROUND INFORMATION ON EX-IM BANK:
What is Ex-Im Bank? Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing at no cost to U.S. taxpayers. The Bank provides a variety of financing mechanisms, including working capital guarantees, export-credit insurance, and financing to help foreign buyers purchase U.S. goods and services.
Ex-Im Bank operates without taxpayer funding and earns revenue that helps reduce the deficit. By charging fees and interest on all loan-related transactions, Ex-Im Bank is self-sustaining and is able to cover all operation costs and potential losses while also producing revenue. The Bank has generated $1.9 billion for U.S. taxpayers over the past five years.
Export financing helps create or save U.S. jobs. Ex-Im Bank approved $32.7 billion in total authorizations in FY 2011 -- an all-time Ex-Im record. This total includes more than $6 billion directly supporting small-business export sales -- also an Ex-Im record. Ex-Im Bank's total authorizations are supporting an estimated $41 billion in U.S. export sales and approximately 290,000 U.S. jobs in communities across the country.
How does Ex-Im Bank derive its jobs numbers? In addition to receiving information directly from U.S. exporters engaged in transactions with Ex-Im Bank regarding related job retention or creation, the agency estimates the number of jobs it supports by using a national jobs requirement estimation tool developed by the U.S. government. This tool relies on a detailed mapping of the inter-industry relationships within the economy (called "input-output tables") generated by the Bureau of Economic Analysis and employment figures generated by the Bureau of Labor Statistics to estimate the average number of U.S. jobs required to produce a given dollar of output by industry. Ex-Im Bank takes this tool and overlays its exports supported by industry to derive the number of jobs associated with Ex-Im Bank financing. The Department of Commerce also uses this tool to derive the total number of U.S. jobs supported economy-wide by U.S. exports.
EX-IM BANK PROVIDES U.S. COMPANIES WITH A COMPETITVE EDGE IN AN INCREASINGLY AGGRESSIVE GLOBAL MARKETPLACE
United States equipment and services are sought after by the world's leading companies because of their quality and reliability. To help U.S. companies win contracts in this industry, Ex-Im Bank is able to provide financing to a potential foreign customer. This financing is solely and exclusively for the purchase of U.S. goods or services and its use is contingent upon this requirement.
With emerging markets in many areas of the globe, efforts by other nations to help their companies obtain export financing is growing. Therefore, when companies are in need of high-quality products and services, Ex-Im Bank increases the opportunities for U.S. businesses to win the contracts instead of their competitors around the world.
updated 20120814
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