US EXIM Bank – by Jim MacLellan Vice-Chair, Southern California Regional District Export Council

Many citizens and businesses do not realize that the US Export Import Bank of the United States exists, let alone knowing of the real reasons behind its establishment and its current importance to the recovery of the US economy.

It was established in 1934 by President Roosevelt to assist businesses to export by providing them with guarantees that they would be paid for their sales. At this time bank failures were an epidemic across the nation. This was the era of the Great Depression and it was one of the urgent measures which the President implemented to help the nation recover from a dire situation. Foreign Trade Zones were also enacted at this time.

The US EXIM Bank performed a critically important role in financing three key international infrastructure projects. The Burma Road, the Pan–American Highway and the Marshall Plan to help re-build Europe after World War II were among the historic accomplishments of the Bank.

We can now fast forward to the recent financial meltdown. Amongst the prime victims were US exporters. Even though they had export orders, and even though they had excellent credit records, many banks withdrew funding from them. This was a most regrettable development and one can only presume that when the Federal Government pumped money into many banks, that some banks preferred to sit on it and earn arbitrage, rather than fulfill basic responsibilities.

Fortunately, President Roosevelt’s creation stepped into the breach and significantly increased their guarantees in order to help these US export businesses. In the Bank’s fiscal year ending September 30th, 2009, they had a record amount of loan guarantees since their founding in 1934 ! President Obama recently announced a program called the National Export Initiative. A key component of this is to double exports over the next 4 – 5 years. Wisely, in order to accomplish this, they are not going to rely just on private sector banks, and will hopefully increase lending approvals for the US EXIM Bank by about 50% in the coming year, with steady increases in the subsequent years.

So, a little known entity created by President Roosevelt’s administration is still helping the nation in its second worst economic downturn since the Great Depression.

by Jim MacLellan, Vice-Chair, Southern California Regional District Export Council www.scrdec.org