All the world, as the man said, is a stage, and the little-known Export-Import Bank is center stage in Washington’s latest political tempest. Conservative lawmakers are mounting an unwise push in the House of Representatives to pull the plug on the bank ahead of a Sept. 30 deadline for its charter to be renewed. The so-called Ex-Im Bank is funded by the U.S. Treasury (a.k.a., taxpayer dollars) and encourages the sale of American exports by providing direct loans, loan guarantees, working-capital guarantees and export credit insurance to foreign buyers and assists U.S. exporters. All these financial products carry the full faith and credit of the U.S. government.

In recent years, the bank has been the target of conservative lawmakers who want to shut it down. Currently, they are mounting a push in the House of Representatives to pull the plug on the bank ahead ofthe Sept. 30 deadline.

President Franklin D. Roosevelt established the Ex-Im Bank in 1934 to help finance overseas sales of American goods to combat the global collapse in trade and trade credit during the Great Depression. In 1945, it was made an independent government agency, which made it easier to obtain capital from the U.S. Treasury to help reconstruct war-tom Europe.

More recently, the bank extended a multi-million-dollar direct loan to finance exports of gas turbine generators from General Electric to three power plants in Saudi Arabia. Alternatively, if a foreign buyer of an American product sought a loan from a commercial bank, that bank could apply for a loan guarantee from the Ex-Im to cover the debt in the event of a default and pass the costs to the buyer.

Ex-Im Bank also offers export credit insurance to American exporters to protect against the political and commercial risks of defaults by foreign buyers. Finally, the bank guarantees working-capital loans extended by commercial banks to eligible exporters with exportable inventory or export receivables as collateral.

The bank does not give these services away. It uses the interest and fees it charges borrowers to reimburse the U.S. Treasury.

Critics claim the commercial lending market, not the government, ought to fund trade finance deals. The bank is derided as an expensive boondoggle, providing large, politically connected multinational firms with an unfair competitive advantage. Critics also argue that there is little evidence to support the notion that the bank is a major export driver, since it finances less than 2 percent of the $2.2 trillion worth of goods and services American firms exported in fiscal 20 13.

Ex-Im supporters say American exports are tied to jobs and economic growth and that the bank supports exports by assuming risks that commercial lenders are unwilling to take on. They say it provides small and medium-sized businesses with important services at reasonable prices.

America needs the bank because, in the current global economic landscape, other countries have export credit agencies that offer comparable services. Without it, American exports would be at a competitive disadvantage.

In an ideal world, businesses would obtain trade financing from privately owned banks. But since more than 60 countries have export credit agencies, shutting down the bank would amount to unilateral disarmament.

Unilateral disbarment doesn’t work any better in global trade than it does in warfare. That’s why America should not abolish the Export-Import Bank without securing reciprocal action from other trading countries that have their own export credit agencies.

originally published: July 5, 2014