The Export-Import Bank: Why it still matters

The Export-Import Bank was created in February 1934, as part of the New Deal, to finance trade with the newly established Soviet Union. A second bank was created a month later to finance trade with Cuba and shortly thereafter expanded to include all countries with the exception of the Soviet Union. Congress passed legislation to combine the two banks in 1935. They also granted the unified bank more powers along with more capital. While the Bank did extend credit to a few countries, such as Italy and China prior to World War II, its primary efforts were concentrated on Latin America as part of the Good Neighbor Policy.

Congress periodically re-authorizes the Export-Import Bank and normally it is routine. Or at least until last September, when the June 2015 renewal became the basis of a fierce political debate. A small group of politicians began expressing opposition to the bank on an ideological basis. These politicians argued that the U.S. government has no role to play in global finance. This article debates this stance and discusses the impact the Export-Import bank has on trade and international investments.