Exim Hamstrung by Credit Standards Says Exim Chief

The US Export-Import Bank is “laser focused” on the challenges posed by China, but needs Congress to remove some of its lending restraints so that it can compete against Beijing, Bank Chair and President Reta Jo Lewis told lawmakers Thursday.

The Bank’s China and Transformational Exports Program and Make More in America Initiative are helping, but “we can and should do more,” she told a House Financial Services subcommittee.

CTEP transactions are still subject to the Bank’s two percent default rate cap. “Suffice it to say, the default rate poses a significant challenge to ExIm’s ability to support US exporters,” she said.

“ I should also note that China EXIM and the PRC’s other export lenders are not bound by these constraints. By their nature, export credit agencies like ExIm exist to take risks the private market is unable or unwilling to take. Because ExIm operates where gaps in the market exist, we end up supporting transactions with higher risk profiles. Inherent in this risk-taking is the possibility of some defaults,” she continued.

Hampered by Cap

“Put simply: ExIm cannot fulfill its mission of supporting U.S. jobs, and cannot aggressively pursue its mandates from Congress, if this agency, created to take risks that commercial lenders would not, is constrained by the two percent default rate cap," Ms. Lewis told lawmakers.

"Currently, this two percent trigger significantly hampers ExIm’s willingness to incur risk, particularly in areas where Congress wants us to be bolder, like competing with the PRC through the CTEP mandate.”

Other US government lending agencies are not subject to the same cap, nor are the foreign export credit agencies that ExIm must compete against, she said.

The Administration is seeking a default rate cap exemption for CTEP transactions in its fiscal year 2025 budget request. “This would allow ExIm to compete more aggressively against the PRC and embrace higher risk technologies and markets, ensuring US exporters can compete on equal footing in the global market.”

An early reauthorization of the Bank, with enhancements to the CTEP mandate, would send a strong signal to the world that Congress is committed to supporting ExIm, she said.