Beyond the Boroughs: The Export Import Bank’s Effect on New York City’s Economy

The Export-Import Bank (Ex-Im Bank) provides critical support for New York City’s export economy by helping businesses that would not find assistance in the private markets. From 2007-2014, the Ex-Im Bank provided over $1.1 billion of support to New York City business, supporting almost $3 billion in export sales.

Nationally, studies show that for every $1 billion of new exports, an additional 4,926 jobs are created. Businesses that export are 8.5 percent less likely to go out of business and pay wages that are 13 to 18 percent higher than those that do not.

As a federal agency, the Ex-Im Bank provides export assistance such as credits, insurance, and guarantees designed to boost the competitiveness of American businesses. The Ex-Im Bank does not compete with private lenders, but instead provides assistance that is not being met by the private market.3 It is estimated that from FY 2009 – 2013 the Ex-Im Bank supported 1.2 million export-related jobs nationwide.

The Ex-Im Bank is a self-sustaining agency, which means that all of their expenses and loan loss reserves are paid for through the fees and interest it charges its customers. In fact, the Ex-Im Bank generates profits for the taxpayers. Not only does the Ex-Im Bank fill a gap in the private capital markets, but the Congressional Budget Office (“CBO”) recently estimated that the Ex-Im Bank’s six largest credit programs will be either revenue neutral or positive in the coming years.5 Since the Federal Credit Reform Act of 1990, the Ex-Im Bank has sent $6.7 billion more to the U.S. Treasury than it has received for program and administrative costs.6 The CBO’s most recent estimate found that the Ex-Im Bank would net $14 billion for U.S. taxpayers over the next decade.7 Furthermore, the Ex-Im Bank’s default rate dropped to a historically low level in 2013 of 0.237 percent.

The U.S. is not the only nation to support its export economy in this manner. Over 30 countries in the Organisation for Economic Cooperation and Development (“OECD”) operate export credit agencies.9 As a result, it is critical for the United States to maintain its own export credit agency to stay globally competitive. Following the Ex-Im Bank’s last reauthorization in 2012, President Obama declared, “As long as our global competitors are providing financing for their exports, we’ve got to do the same.”

This report, from Comptroller Scott M. Stringer, highlights the history of the Bank and finds that the Ex-Im Bank provides significant benefits to the New York City economy, including:

• Over $900 million worth of support to New York City small businesses, which facilitated $2.67 billion worth of sales; and
• Over $48 million in support to Minority and Women Owned Businesses (“MWBEs”) which facilitated over $131 million worth of sales.

These findings highlight the importance of the Ex-Im Bank to the New York City economy, especially for small businesses. As a result, Comptroller Stringer urges Congress to reauthorize the Ex-Im Bank before its scheduled expiration on September 30, 2014.