The Export-Import Bank: Financier or Corporate Welfare?

Zack Anderson, KLJ Articles Editor[1]

The Export-Import (“Ex-Im Bank”) is a governmental agency which extends opportunities for credit for the purchase of United States produced goods, and its existence is currently in jeopardy. In fact, it hasn’t been active since June, when Congress declined to renew its charter.[2] While some will argue that the access to capital that the Ex-Im Bank provides has been relied upon by businesses, and its closure allows other countries to take jobs away from the U.S., others will argue that the bank is a source of corporate welfare of the highest degree and should be terminated sooner, rather than later.[3]

The Ex-Im Bank was originally established by an executive order in 1934 but was later formalized by Congress as an independent agency in 1945.[4] However, beginning in 2012, Congress chartered the Ex-Im Bank on three-year terms, which it allowed to lapse in June 2015 without renewal.[5] This has caused an effective shuttering of the agency and a termination of all activities, other than outstanding obligations.[6]

The Ex-Im Bank serves three general functions. First, it is able to guarantee commercial loans to foreign purchasers who are buying domestically produced goods, essentially supplementing the creditworthiness of the United States for the purchasers.[7] Second, it can guarantee payment to the domestic exporter if the buyer fails to perform.[8] Last, the Ex-Im Bank can actually lend money to finance projects abroad.[9] These functions enable domestic businesses that are shipping their products abroad, and the foreign purchasers who utilize these products, to conduct business where it otherwise is impossible due to limitations on commercial lending—be it excessive risk, lack of collateral, or general uncertainty.

The effects of the Ex-Im Bank’s closure can be see through the relocation of job prospects from the United States to other countries who have similar financing agencies.[10] This loss in opportunity raises the cost of business internationally. Because financing agencies such as the Ex-Im Bank typically have a requirement of fifty percent of domestic content and exportation from the home country, businesses must relocate their operations to utilize these programs.[11] Therefore, although the loans provided by the Ex-Im Bank are short—usually one year—the implications from a temporary shutdown of the agency are large.

However, all hope is not lost. Some United States politicians are keen on the importance of the Ex-Im Bank to U.S. competition abroad and have taken steps to revive it, including the use of a Congressional discharge petition to force a vote to renew its charter.[12] However, differences in opinion regarding the effectiveness and importance of the Bank have formed strong divisions among supporters and critics and an analysis into the merits of both sides is warranted before advocating for its revival or ultimate closure.[13] Opponents to the Bank typically rely on research that shows that the largest beneficiaries of the agency’s financing are suppliers of large corporations, namely Boeing and General Electric.[14]

While it may not be the largest or most important federal agency, the Ex-Im Bank serves a valuable purpose: providing loan guarantees to purchasers of U.S. exports which in turn supports domestic manufacturing. However, its critics will argue this purpose is illegitimate as businesses should shoulder the risk of their transactions and ample finance opportunities exist in the marketplace for both large and small businesses. So who is right, those in favor of government-supported lending, or those who bemoan the Ex-Im Bank as corporate welfare masquerading as financial assistance and job creation?

[1] J.D. expected May 2016.

[2] Susan Davis, Congress Lets Export-Import Bank Expire, USA Today (July 1, 2015, 12:26 PM),

[3] Should Congress Reauthorize the Export-Import Bank?, Wall St. J. (Jan. 26, 2015),

[4] Export-Import Bank Act of 1945, 12 U.S.C. § 635 et seq. (1945).

[5] Export-Import Bank Reauthorization Act of 2012, Pub. L. No. 112-122 (2012).

[6] Gordan Gray, Ex-Im Bank: What Happens Now?, Am. Action F. (July 20, 2015),

[7] Aaron Xavier Fellmeth, The Law of International Business Transactions 726 (2d ed. 2011).

[8] Id.

[9] Id.

[10] Nick Timiraos, General Electric Says to Move 500 U.S. Jobs Overseas Blaming Ex-Im Bank Closure, Wall St. J. (Sept. 15, 2015, 10:46 AM),

[11] Aaron Xavier Fellmeth, The Law of International Business Transactions 727 (2d ed. 2011).

[12] Jim Zarroli, Supporters in Congress Make New Attempt to Revive the Export-Import Bank, NPR (Oct. 25, 2015),

[13] See, e.g., Loren Thompson, Ten Valuable Things America Will Lose If The Export-Import Bank Dies, Forbes (Oct. 23, 2015, 10:14 AM),; Diane Katz, Export-Import Bank: Propaganda Versus the Facts, Heritage Found. (July 13, 2015),; Ian Vásquez,Why We Don’t Need the Export-Import Bank, Cato Inst. (Aug. 25, 1997),

[14] Diane Katz, Export-Import Bank: Propaganda Versus the Facts, Heritage Found. (July 13, 2015),