Finance

1-Should the United States have an ECA and, if so, what role should it play? In your answer, you may wish to discuss EX-IM offerings, various financial constraints which may exist, etc. TN Exhibit 1 may be helpful.

Export-Import Bank of the United States, byname Ex-Im Bank, one of the principal agencies of the U.S. government in international finance, originally incorporated as the Export-Import Bank of Washington on February 12, 1934, to assist in financing the export of American-made goods and services. Its name was changed in 1968. Ex-Im Bank's headquarters are in Washington, D.C., but most operations are handled through seven regional centres.

The bank's principal programs include direct long-term loans, credit and working capital guarantees(principally to commercial banks), short-term and medium-term loans, credit insurance, financing for the purchase of aircraft, and financing for environmental, nuclear, and other special projects. Most bank assistance has consisted of direct financing to buyers abroad of American goods and services. This assistance has taken the form of long-term credits to public or private entities for the purchase and export of capital equipment and related services, credits to foreign lending institutions for relending to local enterprises, credits to countries suffering temporary dollar shortages to maintain the flow of U.S. trade, and agricultural commodity credits (William, pp. 10-19). Through these programs the bank has participated in economic development projects in developing countries. In recent years it has fostered the export of environmentally beneficial goods and services and has, in some cases, minimized the effects of trade subsidies set up by other governments. Despite its name, Ex-Im Bank does not finance imports.

The bank's loans, which are made in dollars and are repayable in dollars, are extended for specific purposes. The bank is required to encourage and supplement private capital but not compete with it. The bank is governed by a board of five directors appointed by the president of the United States.

2-Some professionals believe that the U.S. should have an ECA since other countries have them. Thus, without one, the U.S. would be at a disadvantage. Using TN Exhibit 1 as a guide, do you agree or disagree?

The Export-Import Bank Act of 1945 (P.L. 79-173, 59 Stat. 526) made the Export-Import Bank of Washington an independent government agency operating under a renewable charter. President Franklin D. Roosevelt initially established the bank by an executive order in 1934 and funded it with $1 billion from the U.S. Treasury. President Roosevelt originally intended to fund U.S. trade with the Soviet Union, but within the decade, the mission of the bank expanded to include the provision of loans and grants to U.S. companies seeking to export their products. By executive order, jurisdiction over the bank was transferred between government agencies four times between 1939 and 1943 before Congress established it as an independent agency with the enactment of the Export-Import Bank Act of 1945 (David, pp. 108-116).

The creation of the bank in 1934 was part of a larger economic policy promoting government spending as a means for economic growth. At the time, ...