It's kind of shocking, when it comes to how irresponsible it is. It's emblematic of a desire to, essentially, increase corporate power.
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The Case for the Export-Import Bank
Meanwhile, U.S. content requirements have remained constant, and the United States continues to abide by traditional Organisation for Economic Cooperation and Development (OECD) rules. For example:
• The United Kingdom offered Boeing financing backed by Britain’s ECA if Boeing would put Rolls Royce engines on its jets instead of GE engines.
• Italy’s ECA offered General Electric export credit financing in exchange for moving the production of some of its turbine components from the United States to Italy.
China’s tactics, as well as those of some of America’s allies, have been successful in drawing manufacturing and the jobs associated with that production away from US. soil. EXIM’s 2018 Competitiveness Report accurately documents how extensively foreign ECAs have expanded programs aimed at embedding their small and medium-sized exporters into the global supply chain to the detriment of U.S. exporters, particularly small businesses.*° To ignore these changes and leave the United States without its own export financing weapon is to resign the United States to a reduced role in world geopolitical affairs and accept fewer jobs and lower standards of living for many Americans.
Critics of EXIM employ a host of defamatory slurs like “crony capitalism” and
“Bank of Boeing.” The “Bank of Boeing” moniker is particularly misleading, as it was born in the wake of the 2008 financial crisis when the airline industry was particularly hard hit and private-sector financing was not available for many airlines looking to purchase Boeing aircraft. EXIM’s portfolio tends to be cyclical with different industries relying on export credit financing at different points in time, depending on economic conditions.
The truth is that EXIM provides financing only when the private sector will not or cannot (a concept known as additionality). In addition:
• When EXIM does provide financing, usually in the form of a loan or loan guarantee, the borrower pays interest rates that are driven by the market.
• EXIM does not undercut the private sector. It does not solicit any applications for financing, and all applications are judged on the merits of the transactions.
• All transactions must have “reasonable assurance of repayment,” which
is why EXIM has an exceptionally low default rate, historically hovering around 0.5 percent—a default rate that is the envy of private banking.