196. Minutes of Meeting 60–3 of the National Advisory Council on International Monetary and Financial Problems0
[Here follow a list of participants and a table of contents.]
1. Export Credit Guarantees and Financing
The Council considered the proposals of the Export-Import Bank for expanding its activities in the field of export credit guarantees and financing (NAC Document 60–83). The Chairman noted the importance of guarding against premature disclosure of the proposals, in view of the desire of the Bank to work out the details in advance of any public discussion. (See also NAC Action 60–50 and NAC Document 60–54).1
Mr. Arey referred to draft application and contract forms for the proposed short-term political risk guarantees, and described the manner in which the Bank envisaged their operation. He noted that the Bank intended to discuss these draft forms and a draft contract for a medium-term political risk guarantee with commercial banks in various parts of the country at meetings arranged by some of the Federal Reserve Banks, and that the draft forms were still subject to change in the light of further consideration of their details. The Bank had already had numerous discussions with exporter groups, and planned to have further meetings with exporter groups after the plan became effective. The Bank would charge the total amount of the guarantee contracts against its lending authority, but since there was about $2 billion of unused lending authority available, the Bank did not expect the guarantee program to interfere with project lending.
Mr. Arey called the attention of the Council to the proposal to participate under certain conditions with commercial banks in medium-term export credits considered by the Export-Import Bank to be otherwise eligible, in sole reliance on the credit judgment of the commercial banks.
At the conclusion of the discussion the Chairman commended the Bank for its promptness in developing these proposals, and noted that the facilities to be offered U.S. exporters appeared to compare very favorably to guarantee and financing facilities available to European [Page 376] exporters. The Council agreed that approval of the proposals presented to it would not limit the views of member or other agencies with respect to further developments in this field.
The Council then took the following action (NAC Action 60–75):
Action:
The National Advisory Council approves the proposals of the Export-Import Bank for expanding its activities in the field of short-term export credits and guarantees and medium-term export credits. It is understood that the Export-Import Bank will offer short-term guarantees to exporters against 90 percent of the political risks (non-transferability of foreign currencies; losses resulting from war, civil commotion, and expropriation; or from the imposition of import restrictions or the cancellation of import permits). Guarantees on snort-term transactions would cover substantially all of an exporter’s eligible export shipments as they are made and fees would be paid on this basis. It is further understood that the Export-Import Bank will participate with commercial banks in financing medium-term credits for exports which the Bank considers are otherwise eligible, in sole reliance on the credit judgment of the commercial banks when they carry a stated portion of the credit for their own account and risk and without recourse to the exporter, and when the importer pays at least 20 percent of the invoice value in cash.
[Here follows discussion of an unrelated matter.]
- Source: National Archives and Records Administration, RG 56, Records of the Department of the Treasury, NAC Minutes. For National Advisory Council Use Only.↩
- Dated April 4, NAC Document 60–83 is ibid., NAC Documents. NAC Action 60–50 has not been found. Dated March 15, NAC Document 60–54 is ibid.↩