The Export-Import Bank

The Export-Import Bank is a government-chartered U.S.export credit agency that provides financing for foreign buyers purchasing American-made goods. They also insure the sales for American companies should the foreign buyer default on the payments.  The Ex-Im Bank is willing to accept the risk in financing international deals that most private creditors are not willing to take.  The Export-Import Bank  does not compete directly with the private sector creditors, its goal is to boost the U.S. economy and create and support American jobs.  Credit is available for any American company with a more recent concentration on small businesses.  The bank has made $3.4 billion in profits since 1934, and only 2% of its loans have failed in that same amount of time.

The Export-Import Bank is often referred to as "Boeing's Bank", because Boeing creates the largest number of transactions for the bank.  Being that Boeing manufactures airliners to be sold and flown in a global market, of course the majority of customers are going to be foreign airlines.  The Export-Import bank allows several developing foreign airlines, which otherwise wouldn't be able to, the ability to purchase Boeing aircraft, ultimately supporting U.S. jobs.

The bank has been in the news lately because for the first time in its nearly 78 years of existence, the Senate has voted against re-chartering the bank before its current charter expires on May 31st.  The bank is close to reaching its current $100 billion lending limit, and lawmakers are seeking an increase to $140 billion on the new charter.  According to Reuters, the bank supports about 290,000 jobs annually in the export industry, and a loss of the bank would be a big blow to Boeing and other exporters.  Unfortunately, this normally uneventful reauthorization has become yet another case of politics.  In another attempt to tarnish the Obama Administration before the upcoming elections, conservative Congressional Republicans have decided to vote 'no' on the bill unless they get it written their way, citing the bank as being "corporate welfare" and disagreeing with the general idea of the bank.  They also cite the bank as giving huge cost breaks to foreign businesses while U.S. businesses end up having to pay much more for the same product.  A Delta Air Lines executive was quoted in the Seattle Times saying that if they could use the bank like foreign carriers then "it could have saved approximately $100 million a year in financing costs and we could have used that money to hire more workers or even purchase additional aircraft from Boeing".  Other Republicans are working to create a bipartisan extension for the Import-Export Bank which includes reforms and accountability measures.

The ATA stands against the Ex-Im Bank, filing a lawsuit against them in November of 2011.  The lawsuit is over a $3.4 billion loan guarantee to Air India to finance 27 B787s for the airline.  The ATA is trying to halt the deal, citing that the bank "fails to meet statutory requirements, including consideration of the impact on the US airline industry and US airline jobs”-CAPA.   The ATA claims that the Ex-Im Bank is offering financing to a poorly run airline with very risky credit.  They say that the company's poor financial status should disqualify them from the financial assistance. 

Boeing has paid two of Washington's top lobbying firms to persuade lawmakers to reauthorize and expand the bank's charter.  This lobbying is an attempt to overpower U.S. airlines' objections to the bank, who say they are hurt when our government helps foreign rivals buy airplanes-Bloomberg, as well as Tea Party lawmaker opposition.  Anyone can see why Boeing would have an obvious interest in reauthorizing the bank.  It helps them to sell a lot of airplanes all around the world, and may end up enabling a huge Air India 787 deal.