Export–Import Bank of the United States

Based on Wikipedia: Export–Import Bank of the United States

The Bank That Builds Highways to Chile and Keeps Boeing in Business

In 1935, the United States government made its first loan through a brand-new kind of bank—$3.8 million to Cuba for the purchase of American silver ingots. It was an odd inaugural transaction for an institution that would go on to finance the construction of the Pan-American Highway, keep supply lines open to China during World War II, and become one of the most controversial pieces of America's economic machinery.

The Export-Import Bank of the United States, known by the acronym EXIM, is something most Americans have never heard of. Yet it shapes global trade in ways that touch everything from the airplane you fly on to the construction equipment building roads in developing nations.

What exactly is it? EXIM is what's called an export credit agency—a government-backed financial institution that helps domestic companies sell their products overseas by providing loans, insurance, and guarantees to foreign buyers. Think of it this way: if a Peruvian airline wants to buy Boeing jets but can't get favorable financing from private banks, EXIM steps in to make the deal possible.

Why Does the Government Run a Bank?

This is the central question that has divided American politicians for nearly a century.

The argument for EXIM goes like this: international trade is risky. Private banks often won't lend money to foreign buyers because of political instability, currency fluctuations, or simply the difficulty of enforcing contracts across borders. Without government backing, American exporters would lose sales to competitors from countries with their own export credit agencies. And there are many such agencies—around sixty foreign countries operate their own versions of EXIM.

The argument against is equally straightforward: this is corporate welfare. The government is using taxpayer-backed credit to subsidize specific companies, and those companies tend to be enormous multinational corporations that don't need the help. When your biggest beneficiary is Boeing, one of the largest companies on Earth, it's hard to claim you're helping the little guy.

Both arguments contain truth. That's what makes EXIM so persistently controversial.

Born in the Great Depression

Franklin Roosevelt created the Export-Import Bank in February 1934 through executive order—no Congressional approval needed. The stated purpose was to facilitate trade with the Soviet Union and Latin America during a time when global commerce had collapsed.

Just a month later, Roosevelt created a second Export-Import Bank, this one specifically for trade with Cuba. The two banks merged in 1936, and Congress made the combined institution an independent agency in 1945.

That timing matters. The Export-Import Bank Act of 1945 wasn't just administrative housekeeping. It was preparation for what would become one of EXIM's most consequential roles: financing the reconstruction of a devastated world.

The Bridge Between War and Recovery

There's a gap in the history of post-World War II reconstruction that doesn't get much attention. The Lend-Lease program ended in September 1945. The Marshall Plan didn't begin until 1948. The World Bank wasn't yet operational.

Who filled that gap? EXIM.

Congress increased the bank's lending authority almost fourfold, from $750 million to $3.5 billion, specifically to meet the demand for reconstruction financing. In 1945 and 1946, EXIM extended credit to France, Denmark, Norway, Belgium, the Netherlands, Turkey, Czechoslovakia, Finland, Italy, Ethiopia, Greece, Poland, and Austria.

The money went to purchase American machinery, repair infrastructure, and restore the import-export capabilities that had been obliterated by six years of total war. For a critical two-year window, EXIM was essentially the West's only functioning development bank.

Roads Through Jungles and Mountains

Perhaps nothing illustrates EXIM's scope better than the Pan-American Highway.

Running from Alaska to the southern tip of Chile, this 19,000-mile road system connects fourteen countries. Its construction began in 1936 and wasn't completed until 1980—a forty-four-year engineering marathon through some of the most challenging terrain on Earth.

EXIM financed equipment purchases for virtually every country along the route: Mexico, Honduras, Guatemala, Nicaragua, El Salvador, Costa Rica, Panama, Colombia, Ecuador, Peru, and Chile. In Paraguay, Argentina, and Bolivia, the bank supported construction of highway spurs connecting to the main route.

The credits went to American manufacturers—Caterpillar, Allis-Chalmers, Koehring Company, Galion Iron Works, Thew Shovel—whose bulldozers and graders carved paths through rainforests and over mountain passes. Twenty different transactions, coordinated across more than a dozen governments over multiple decades.

This is export credit at its most ambitious: not just selling products, but physically reshaping continents.

The Burma Road

A more urgent project came in 1938. With Japan's invasion of China cutting off coastal supply routes, the only way to get military equipment to Chinese forces was overland from British Burma. The problem: no road existed.

The Burma Road was carved 717 miles through mountains linking Lashio in Burma to Kunming in China's Yunnan Province. EXIM approved a $25 million credit in December 1938—crucial not just for construction but for the trucks to actually use the road once built.

A 1939 article in Foreign Affairs noted that China used part of the loan to purchase 2,000 three-ton trucks from Ford, Chrysler, and General Motors. An additional $20 million followed in 1940. The Burma Road kept China supplied until Japanese forces captured it in 1942, and it remained a symbol of the desperate improvisation that characterized the early Pacific war.

The Boeing Problem

Let's talk about the elephant in the room.

Between 2007 and 2008, sixty-five percent of EXIM's loan guarantees went to companies purchasing Boeing aircraft. By 2012, that figure had risen to eighty-two percent. Critics began calling EXIM the "Bank of Boeing," and the label stuck.

This concentration creates a political problem. EXIM's charter requires that at least twenty percent of its lending go to small businesses. The bank has often fallen short of that threshold. In fiscal year 2013, seventy-six percent of the value of loans and guarantees went to the top ten recipients.

When Barack Obama was campaigning for president in 2008, he called EXIM "little more than a fund for corporate welfare." Four years later, as president, he signed its reauthorization and praised the bank for helping thousands of businesses sell products overseas while creating jobs at home.

Both statements can be true simultaneously. That's the frustrating reality of export credit.

The Case for Boeing

EXIM's defenders point out that Boeing is the largest American exporter by dollar value. It's also the last comprehensive commercial aircraft manufacturer in the United States—Douglas, Convair, and Lockheed all exited the commercial aviation business decades ago.

Meanwhile, China's state-owned Commercial Aircraft Corporation of China, known as Comac, is heavily subsidized and aggressively seeking to capture market share from both Boeing and Airbus. If EXIM doesn't support Boeing's financing, the argument goes, China will simply outcompete American manufacturers not on the quality of their aircraft but on the generosity of their government backing.

This is the core logic of export credit agencies everywhere: every major economy operates one, so unilateral disarmament would simply hand business to foreign competitors. It's an arms race mentality applied to trade finance.

How Export Credit Actually Works

EXIM offers three main products, and understanding them helps clarify what the bank actually does.

Buyer financing means EXIM lends money directly to foreign purchasers of American goods. A foreign airline that wants Boeing jets but can't get a commercial loan can borrow from EXIM instead.

Export credit insurance protects American exporters against the risk of non-payment. If a company ships products overseas and the buyer defaults, EXIM covers the loss. This lets exporters take risks they otherwise couldn't afford.

Working capital guarantees help American companies access loans from private banks by guaranteeing repayment. A small manufacturer might not qualify for a loan to fulfill a large export order, but with EXIM's guarantee, banks will lend.

Crucially, EXIM's charter prohibits it from competing with private lenders. The bank is supposed to step in only when commercial financing isn't available—when private banks are either unable or unwilling to accept the political or commercial risks inherent in a deal.

Whether EXIM actually adheres to this limitation is a matter of ongoing debate.

The OECD Rules

Export credit agencies could easily become weapons of trade war, with governments racing to offer ever-more-generous terms to undercut competitors. To prevent this, member nations of the Organisation for Economic Co-operation and Development—the club of wealthy democracies—have agreed to common rules governing export credit.

The goal is to ensure that exporters compete on the quality of their goods and services, not on who has the most generous government financing. Minimum interest rates, maximum loan terms, and transparency requirements create a level playing field.

At least, that's the theory.

The glaring exception is China. The China Export-Import Bank is not bound by OECD rules because China isn't an OECD member. This asymmetry drives much of the current debate over EXIM's mission. How can American exporters compete when Chinese competitors have access to unlimited government-backed financing with no international constraints?

In response, EXIM created the "China and Transformational Exports Program" specifically to help American companies compete with Chinese rivals in strategic industries. The bank's mission has shifted from pure export promotion toward something closer to industrial policy.

The Authorization Wars

Unlike most government agencies, EXIM must be periodically reauthorized by Congress. This requirement, mandated by the Government Corporation Control Act of 1945, means the bank's existence comes up for debate every four to five years.

For decades, reauthorization was routine. Then came 2015.

Congressional authorization lapsed on July 1, 2015. For five months, EXIM couldn't engage in any new business. It continued managing its existing loan portfolio, but no new transactions were possible. For opponents of the bank, this was a victory—proof that the economy wouldn't collapse without government-backed export financing.

The impasse broke in December 2015 through an unusual legislative maneuver. Supporters used a discharge petition—a rarely successful procedure that forces a vote over the objection of committee leadership—to attach EXIM reauthorization to a highway funding bill. President Obama signed the reauthorization into law.

Four years later, President Trump signed another extension as part of a larger appropriations bill, authorizing EXIM through December 31, 2026.

The pattern reveals something important: EXIM's survival is never guaranteed. The bank exists in a perpetual state of political uncertainty, its continued operation dependent on winning repeated legislative battles.

Governance and Structure

EXIM is governed by a five-member Board of Directors appointed by the President and confirmed by the Senate. To ensure bipartisan oversight, no more than three board members can belong to the same political party. At least one member must come from the small business community.

The President of the Export-Import Bank serves as Chairman of the Board. The First Vice President serves as Vice Chairman. Board members serve staggered four-year terms and can continue serving up to six months past their term's expiration while awaiting a successor's confirmation.

Two additional officials—the United States Trade Representative and the Secretary of Commerce—serve as non-voting members of the board. This connects EXIM's decisions to the broader trade policy apparatus of the executive branch.

In practice, EXIM operates with considerable independence. It became self-funding in 2007, meaning it doesn't require annual appropriations to operate. The bank generates revenue from the fees and interest it charges on its financial products. However, its loans remain backed by the full faith and credit of the United States government—meaning taxpayers would be on the hook if the bank's portfolio collapsed.

After the Cold War

When the Berlin Wall fell in 1989 and the Soviet Union dissolved in 1991, EXIM faced a transformed world. For the first time since World War II, American companies could conduct business freely with Eastern Europe.

EXIM was among the first financial institutions to offer financing for exports to the former communist bloc. President George H.W. Bush waived the Jackson-Vanik amendment—a 1975 law that had blocked normal trade relations with communist countries—opening the door for EXIM to support trade with the Soviet Union and its successor states.

The first transaction to Czechoslovakia since 1947 came in January 1991: a guarantee allowing the Tonak Hat Company to purchase computers from Digital Equipment Corporation. Since then, EXIM has supported exports to twenty-five nations that emerged from behind the Iron Curtain.

This expansion illustrates how EXIM's mission adapts to geopolitical shifts. The bank that once helped contain communism by strengthening allied economies pivoted to integrating former adversaries into Western trade networks.

The Developing World

In January 2015, President Obama announced a major expansion of U.S. economic engagement with India. EXIM would finance $1 billion in exports to India. The Overseas Private Investment Corporation would lend $1 billion to small and medium-sized rural enterprises. The Trade and Development Agency would commit $2 billion to renewable energy projects.

Perhaps more significantly, Obama and Indian Prime Minister Narendra Modi resolved long-standing disputes over nuclear liability that had prevented American companies from building nuclear reactors in India. The announcement represented a coordinated deployment of multiple U.S. development finance tools, with EXIM as a key component.

This is the modern vision of export credit: not just financing individual transactions, but serving as one instrument in a broader strategy of economic diplomacy.

The Ongoing Debate

EXIM's supporters argue that the bank creates and sustains American jobs by helping exporters compete in global markets. The National Association of Manufacturers claims EXIM supports nearly 290,000 export-related jobs. More than eighty-five percent of all EXIM transactions, they note, directly benefit small business exporters.

Critics point to different numbers. They note that most of the bank's dollar value flows to a handful of giant corporations. They question whether transactions would really disappear without government backing, or whether private lenders would step in. They ask why taxpayers should subsidize sales to foreign governments and companies, some of which—like China's state-owned nuclear corporation—might not align with American interests.

The debate ultimately comes down to competing visions of government's role in the economy. Is EXIM a necessary tool for competing in a world where every major economy backs its exporters? Or is it a distortion of free markets that picks winners and losers while exposing taxpayers to unnecessary risk?

After nine decades, the Export-Import Bank continues to operate—but never without controversy, and never with its future entirely secure. It remains what it has always been: a government bank that makes deals happen, finances roads through jungles, keeps aircraft manufacturers in business, and generates endless political argument about whether any of it is a good idea.