1 - Eximbank: The Controversy, Its Mandate, and Its Programs

Abstract

This chapter discusses the controversy, mandate and the programs of Eximbank. The Reagan administration reduced the Bank's lending authority from $5.5 billion in FY1981 to $4.4 billion in FY1982, with further reductions planned through 1985. In opposing the proposed reductions, Senator John Heinz emphasized in his March 19, 1981 letter to President Reagan the importance of exports and the need to respond to foreign-subsidized export financing. The exporting community also rallied to the defense of the Bank. In addition to the desire to promote U. S. exports, support for the Bank arises from the belief that even though government-subsidized financing of exports is undesirable, it is a necessary response to the export financing subsidization provided by other countries, a number of which provide considerably more financing support for their exports than does the United States. The chapter also discusses the need for government-supported export financing programs, the evaluation of the export financing programs of the Eximbank, the Bank's dual roles of financier and promoter of U. S. exports, and the appropriate response to international export financing competition. To determine the appropriate governmental role, if any, in export financing, it is necessary to determine not only whether government export financing can potentially provide welfare gains to the United States, but also if an organization, such as the Eximbank can reasonably be expected to provide export financing in an efficient manner.