After many months of debate, a bill to reauthorise US Exim and allow the increase of its portfolio cap to US$140bn was passed by the US House of Representatives.
“The passage of this bipartisan legislation provides much-needed certainty and predictability to US exporters and their workers,” comments Fred Hochberg, US Exim chairman and president.
“It will provide resources to help meet the President’s objective for the bank’s re-authorisation which is a key component of his National Export Initiative aimed at doubling exports,” he adds.
The bill, which still needs to be passed by the Senate, ensures that US Exim is reauthorised through to 2014. The cap limit will initially be raised to US$130bn at the beginning of October this year, and increased to US$140bn the following October.
US Exim provides financing for US exporters by providing funding or guarantees to support the financing of US export contracts.
The bank’s charter expired on September 30 last year, and it has been running on temporary authority since October.
In an election year, US Exim has attracted some criticism from Republicans. Previous efforts to pass reauthorisation legislation were thwarted by Republican groups; with some arguing that US Exim-backed export finance is a form of corporate welfare.
However, US Exim has won the support of President Obama, who while addressing heads of business at a conference in March, stated that: “During the financial crisis, trade finance dried up all around the world, and US Exim lived up to its mission – it stepped up to fill the void at record levels, and at no cost to taxpayers. In fact since 2005, US Exim has returned billions back to the US treasury.”
Market reaction to the bill has been positive so far. Kathleen Gowin, interim president and CEO at the banking industry body Baft-IFSA said: “US Exim plays a crucial role in global finance. Through its financing products for US lenders and exporters, it supports US trade and more than 200,000 American jobs. Exports are vital to the economic recovery, and trade finance is integral to exports. Robust, effective programmes at US Exim help facilitate trade finance and liquidity in the markets.”
Last year saw the bank mark its third straight year of record authorisations at US$32.7bn, including a record US$6bn in small business transactions through its Global Access programme, up US$1bn from 2010.
The bank had an historic year in Sub-Saharan Africa, where its financing topped the US$1bn mark for the first time.
Overall US exports are rapidly growing; the country exported US$180.8bn in goods and services in January 2012, an increase of US$1bn over December 2011, according to data from the Bureau of Economic Analysis of the US Commerce Department.
Exports of goods and services over the last 12 months totalled US$2.118tn, which is more than 34% above export levels recorded in 2009.