George Allen served in the US Senate, and was the 67th Governor of Virginia.
VG: What is the Export-Import Bank? Is it owned and run by the Federal Government?
GA: The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States. It is part of the Executive Branch of the United States government (technically an independent agency).
Since its founding in 1934, the bank has backed an estimated $506 billion of U.S. exports. Its mission is to support jobs in the United States by assisting in financing exports of U.S. goods and services. It provides export-financing products that fill gaps in trade financing and assumes credit and country risks that the private sector is unable or unwilling to accept. It plays a vital role in leveling the global playing field by helping U.S. companies to offset some of the financing support that foreign competitors receive from their governments—there are at least 59 other export credit agencies around the world. The bank also helps U.S. companies secure new customers and increase market share in emerging markets.
VG: Would reauthorizing the Export-Import bank help many Virginia businesses?
GA: Since 2007, Ex-Im Bank has supported about $1 billion in exports from Virginia. Nearly 100 companies have benefited directly from its financing support, and many companies throughout the supply chain rely on sales to domestic customers that are eventually incorporated into exported products. These indirect exports don’t show up in Ex-Im Bank’s numbers, but those sales—and the jobs they support—are absolutely vital to the manufacturing base. With Ex-Im Bank support, Virginia companies are exporting everything from satellites to residential air conditioning equipment.”
VG: What is the cost to taxpayers to run the bank?
GA: The Ex-Im Bank operates at no cost to taxpayers and moreover generates a profit that helps reduce the federal deficit. Last year, it sent more than $1 billion to the U.S. Treasury after covering its own expenses. It is self-sustaining, covering its operating expenses by charging its customers fees and interest on loan guarantees and export credit insurance. While the Bank has a low default rate—less than 0.3 percent—it maintains a reserve of about $4 billion that is funded from the fees and interest it brings in from its customers, not from taxpayer dollars.
VG: Did President Reagan support the Export-Import Bank?
GA: President Reagan reformed and reauthorized the Ex-Im Bank twice, in 1983 and 1986. In the 1986 signing statement for Ex-Im’s reauthorization, he called the bill an “important signal to both our exporting community and foreign suppliers that American exporters will continue to be able to compete vigorously for business throughout the world.” I wrote more about this in the Washington Times in May.
VA: What if there was no Export-Import bank? What would be the alternative?
GA: The Ex-Im Bank provides crucial services—from insurance guarantees and export financing—in circumstances where private-sector lending and guarantees are not available on a competitive, market-based rate. Without the Ex-Im Bank, manufacturers in the United States would lose sales to foreign competitors, which could access trade financing from another export credit agency.
VA: Do you think Congress will support reauthorization?
GA: For most of its history, the Ex-Im Bank was authorized on a bipartisan basis without controversy. In 2012, however, the Bank faced opposition, but the reauthorization bill ultimately passed with broad bipartisan support. I am confident that a reauthorization bill this year will earn similarly strong support from Members of Congress who wish to act for a level, competitive field for men and women working in American manufacturing.