US Ex-Im chairman and president, Fred Hochberg, speaks to Shannon Manders about the bank’s recent accomplishments and President Obama’s goal of increasing US exports
GTR: US Ex-Im has set a series of records in terms of figures while addressing tightened liquidity. Can you comment on the bank’s increased activity?
Hochberg: For the fiscal year ending September 30, we were up 46%. It was a very strong year, and represented a record year for the bank, and a record year for 75 years of banking.
Additionally, in the first three months of our new fiscal year – which was October, November, December 2009 – we also tripled the authorisations that we had last year at that time. Some of this is timing; some of it is real growth. In general we see a more robust year this year.
Part of our growth, I believe, is filling in a gap – stepping into the breach – when the private sector is unable to do so.
I think we will be seeing a very strong period for export credit agencies (ECAs) worldwide, over the next several years. As banks are deleveraging, and as banks have a reluctance to lend 10 or 12-year money, we have already seen – and I believe the trend will continue – that there’ll be a greater need for ECAs to step in and provide the kind of financing to keep the global economy going.
GTR: Which US Ex-Im products are you seeing an increased demand for?
Hochberg: There are a couple of areas in particular. Small businesses have been strong – and we all know that small businesses have a harder time accessing credit. It’s one of the reasons President Obama has put an emphasis on the small business sector. Last year we were up over a billion dollars in small business. And this year so far we’ve done approximately double the small business transactions.
We are also seeing a greater demand for insurance products. Some of the large insurers have pulled back, and that has put an increased demand on insurance.
There has also been some increase in long-term financing in transportation – the medium-term has been soft.
GTR: What targets has the bank set for the next year?
Hochberg: Although we don’t like to forecast in financial terms, we have a budget of about US$20bn in financings, and I would say that according to the current trend we’ll exceed that. In the budget that President Obama put forth to Congress, he asked for an increase in our expenditures – partly to help support his initiative of doubling exports in the next five years.
GTR: Which regions will the bank be focussing on?
Hochberg: We’re open in 150 countries. We’re adding particular emphasis in countries such as Colombia, Brazil, Nigeria, South Africa, Turkey, India, Vietnam and Indonesia. These are countries that have strong growing general economies, are growing in GDP, and are investing particularly strongly in infrastructure.
GTR: How does the US government view the bank’s increased role in the market?
Hochberg: President Obama has said to me that he very much wants the US Ex-Im to support American goods and services sold overseas. That’s why he’s launching an export initiative, and it’s why he’s asked for an increased budget at the US Ex-Im, the Small Business Administration, and other agencies that help support exports and trade.
If there’s one thing that Americans can agree upon is that we need to have a stronger role in exporting. The US is the largest manufacturing country in the world, and yet we’re the third largest exporter.
GTR: President Obama has unveiled his plans to increase US exports and launch a National Export Initiative? What do you believe the president has in mind?
Hochberg: What the president wants is to coordinate the different agencies in the government that can help with exports – the US Ex-Im, the Department of Commerce, the US Trade Representative and the Small Business Administration – to more seamlessly fit them together to help US companies export their goods and services overseas. This is so that we can do everything we can to support that initiative to double exports in five years.
One of the things we did this past Fall, as a precursor, is organise an eight-city tour of the US. We do a lot of focus in foreign countries, but part of our focus this year has been to make sure that we encourage small businesses in particular to see what support is available to them, so that they can take advantage of those programmes.
US Ex-Im triples financing authorisations
The Export-Import Bank of the United States (US Ex-Im) authorised a record US$9.9bn in loans, guarantees and insurance during the first quarter of fiscal year 2010. This is more than three times the US$3.28bn authorised in the same period (October 1 – December 31) of fiscal 2009.
The financing supported approximately US$12.4bn in US exports, which in turn supports an estimated 91,760 US jobs.
Long-term authorisations for the fiscal 2010 first quarter totalled US$5.97bn, up from US$2.27bn for the same period of fiscal 2009. Short-term insurance for the quarter climbed to US$3.6bn from US$776.3mn a year earlier, a 368% increase. Direct small business authorisations totalled US$1bn for the period, a 93% jump from the fiscal 2009 first quarter.
In December 2009 alone, US Ex-Im authorised US$5.66bn in financing, the largest monthly authorisation level in its 75-year history.
The 2010 first quarter figures are the latest in a series of records set by US Ex-Im while addressing tightened liquidity in the current financial crisis. In fiscal 2009, total US Ex-Im authorisations came to US$21bn, while authorisations for small business exporters totalled US$4.36bn, both historic highs.
President Obama’s National Export Initiative
US President Obama has announced a goal of doubling US exports over the next five years to support two million jobs in America.
The plan represents the first time the US will have a government-wide export-promotion strategy with focused attention from the president and his cabinet.
Details of the president’s National Export Initiative (NEI) were unveiled by commerce secretary Gary Locke in early February. Locke explained that the NEI will help the country reach the president’s goal by providing more funding, more focus and more cabinet-level coordination to grow US exports.
“Increasing the export of American products and services to global markets can help revive the fortunes of US companies, spur future economic growth and support jobs here at home,” Locke said. “This initiative will correct an economic blind spot that has allowed other countries to chip away at the United States’ international competitiveness.”
The NEI is focused on three key areas:
1) A more robust effort by this administration to expand its trade advocacy in all its forms, especially for small and medium-sized enterprises. This effort includes educating US companies about opportunities overseas, directly connecting them with new customers and advocating more forcefully for their interests.
2) Improving access to credit with a focus on small and medium-sized businesses that want to export.
3) Continuing the rigorous enforcement of international trade laws to help remove barriers that prevent US companies from getting free and fair access to foreign markets.
To improve access to credit, the president has called upon the US Ex-Im to increase its financing available for small and medium-size businesses from US$4bn to US$6bn over the next year. The 2011 budget also allocates additional money to help the US Ex-Im administer its expanded efforts.
US Ex-Im is a self-sustaining federal agency that is funded by the interest and fees that it collects. The additional allocation in the 2011 budget will enable the bank to use more of the funds that it collects and does not represent any additional money from the US Treasury.