Academic journal article ABA Banking Journal

Ex-Im Bank May Expand Delegate Program

Academic journal article ABA Banking Journal

Ex-Im Bank May Expand Delegate Program

Article excerpt

At a recent public hearing in Boston, a panel of bankers was enthusiastic about having the Export-Import Bank of the United States expand its delegated lender program to medium-term loans. They were decidedly unenthusiastic, however, about sharing the risk on these loans, an idea floated by the independent federal agency.

Ex-Im Bank, as it is known, a small agency with limited resources, has met with success in delegating lending authority to private lenders under its Working Capital Guarantee Program. This involves short-term loans which help small businesses produce and fund exports. Traditionally, Ex-Im Bank would offer a guarantee (90% of working capital loans) only after conducting a full credit review. Eighty banks participate in the short-term program. To speed up the process and expand the program, Ex-Im Bank prepared a set of underwriting standards which grants delegated lenders the authority to commit the agency to a guarantee without prior review.

The bank is interested in doing the same for medium-term (1 to 5 year) loans, which are used to help U.S. companies sell capital goods overseas. However, because of the longer term and higher loan limits (up to $10 million per transaction) Ex-Im Bank wished to explore sharing a portion of the risk of delegated medium-term loans. …

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