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Eximbank's April 1972 request that posts provide a broader range of data is a move in this direction and could elicit the kind of information that will help Eximbank better assess the need for its financing assistance. Eximbank indicated, however, that posts' effectiveness in these matters would depend on the officers assigned; some officers give good assessments while others provide only the minimum. This effort should be vigorously pursued and complemented by comments about other credit resources available to the borrower so that Eximbank financing does not compete with available U.S. or foreign financing.
Eximbank told us it felt that analyzing products and markets in need of financing assistance was the Department of Commerce's responsibility and that it would not duplicate this function. We agree that duplication should be avoided but maintain that closer coordination with Commerce on market analysis could assist Eximbank in identifying products and countries most in need of its financing.
U.S. commercial banks indicated that in certain situations, such as with sound investments, they would be willing to provide a greater percentage of the financing. Thus, U.S. and foreign commercial banks might well take on more of the financing presently assumed by Eximbank, particularly when the money supply is plentiful. Insurance companies, both in the United States and in foreign countries, were mentioned to us as other possible sources of capital that Eximbank might explore. A large U.S. insurance company that we spoke with told us it would be interested in supporting export transactions on a long-term basis at an 8- to 10percent interest rate. This company indicated a willingness to support aircraft sales as well as nuclear power plant sales for up to 30-year terms, which it does domestically. Efforts by Eximbank in coordination with the Department of State also might encourage foreign governments with strong favorable balance-of-payments positions to make available, at appropriate rates and terms, the foreign exchange necessary to finance imports.
Eximbank should develop more definitive criteria for evaluating prospective loans. A concise explanation of considerations involved in reviewing loan applications would assure the Board of Directors that the staff had given appropriate attention to factors bearing on the loan. It would also provide a historical record and assist NAC in its monitoring role of insuring that Eximbank was operating within established policy guidelines.
We recommend that Eximbank develop a management information system to
--provide management with information necessary for
determining essentiality of Eximbank financing,
--determine countries and products most in need of
--document the basis of management's actions, and
--provide evaluation of the results of Eximbank financ
Such a system should include:
--Market development and such other relevant factors as
supply and demand, competitive advantage, trade patterns, available financing, U.S. trade interests, trade negotiations, and domestic and foreign policy objectives in the decisionmaking process.
-- Important contributions that Embassies can make, not
only on broad political and economic aspects, but
--Coordination with other Federal agencies to insure
that all appropriate information on Eximbank financing is obtained.
EXIMBANK LEGISLATION, ADMINISTRATION, AND ACTIVITIES
The Export-Import Bank Act of 1945 (12 U.S.C. 635), section 2(a) states the purposes and objectives of Eximbank to be to:
"*** aid in financing and to facilitate exports
Section 2(b) states that:
"It is the policy of the United States to foster
Recognizing the importance of expanding exports and alleviating the Nation's balance-of-payments problems, the Congress, in 1968, liberalized Eximbank's lending criteria. The act of July 7, 1968 (82 Stat. 296), authorized Eximbank to use up to $ 500 million to facilitate certain export transactions which, in the judgment of its Board of Directors, offered "sufficient likelihood of repayment," rather than the reasonable assurance of repayment contained in the earlier legislation, to more actively foster U.S. foreign trade and long-term commercial interest, thus improving the U.S. balance-of-payments position.
By enacting the Export Expansion Finance Act of 1971 the Congress reaffirmed and made possible an even broader Eximbank role in increasing exports. The act expanded the loan, insurance, and guarantee authority of the Bank from $13.5 billion to $20 billion and removed Eximbank's net outlays from the Federal budget. It also exempted Eximbank from the annual expenditure and net lending limitations imposed on the Federal budget and provided that no limitation or restraint be placed on commercial financial institutions for the purpose of financing U.S. exports.
Management of Eximbank is vested in the Board of Directors, composed of Eximbank's President and first Vice President serving as the chairman and vice chairman, respectively, and three additional members, appointed by the President of the United States by and with the advice and consent of the Senate. The Board adopts the bylaws under which Eximbank operates and designates the vice presidents and other principal officers and prescribes their duties. A committee of nine members appointed by the Board serves in an advisory capacity to the Board on Eximbank's operations.
Eximbank's activities are conducted principally through its office in Washington, D.C. Two other offices, one in Vienna, Austria, for European operations, and one in Hong Kong, for Far East operations, are maintained. Each overseas office is staffed with one officer who represents the bank in his geographic area.
Eximbank does not require appropriated funds. Its financial resources are derived mainly from (1) borrowings from the U.S. Treasury, (2) the sale of its own securities in the private market, (3) repayments of loan principal, and (4) income from operations.
These financial resources are used to carry out various programs related principally to financing, guaranteeing, and insuring export transactions. In March 1969 the present management team overhauled existing programs and initiated many new programs to increase responsiveness to business needs.