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Sarbanes Oxley : Governance : Thought Leader

Transaction Due Diligence Best Practices

James Lambright
Chairman and President
Export Import Bank of the United States

The board of directors of the Export-Import Bank of the United States (Ex-Im Bank) has adopted guidelines for Transaction Due Diligence Best Practices, which will improve the transparency and effectiveness of Ex-Im Bank’s due diligence policies.  The “know-your-customer” guidelines will help the Bank’s partners more easily identify the key risk issues the Bank considers in evaluating applications.

The guidelines also will benefit taxpayers by balancing the efficient and timely execution of the Bank’s mission – supporting exports to create U.S. jobs – with ensuring that Ex-Im Bank supports creditworthy and legitimate transactions.

Ex-Im Bank was chartered by Congress to finance export transactions considered too risky for commercial banks.  Nonetheless, Ex-Im Bank has maintained an historical portfolio loss rate of less than two percent, which compares favorably to the loss rates for many commercial banks.  In addition, over the past fifteen years, Ex-Im Bank has generated a net positive return for the taxpayer of $4 billion.  Despite these successes, the Bank has uncovered instances of fraud in its portfolio and is constantly seeking ways to prevent losses while providing timely service to its customers.

“Our experience has helped us identify due diligence best practices,” said Ex-Im Bank Chairman and President James H. Lambright.  “These guidelines are intended to provide a framework for effective due diligence by our transaction partners, which, when undertaken, should decrease Ex-Im Bank’s transaction processing time and increase likelihood of approval.”

“Export transactions have become increasingly complex with significant third party involvement, and Ex-Im Bank, like every lender, faces the challenge of ensuring that transactions are both creditworthy and legitimate,” said Ex-Im Bank General Counsel Howard Schweitzer, who led the Bank’s effort to develop the guidelines.  “At the same time, an efficient transaction approval process is critically important to the role Ex-Im Bank plays in the global marketplace.”

Schweitzer noted that the Bank has worked closely with lenders, exporters, public interest groups and the United States Department of Justice to arrive at a set of guidelines that meets these objectives and provides for shared responsibility in evaluating transactions.

The guidelines may be viewed and downloaded from the Bank’s web site.

The guidelines are only one of a number of measures the Bank has taken to address transaction legitimacy and repayment risk.  In addition, the Bank’s first Inspector General was appointed by President George W. Bush in August 2007, and detecting and preventing fraud, waste, and abuse is a central component of the Office of Inspector General’s mission, details of which are available at www.exim.gov/oig

Ex-Im Bank is in its 73rd year of helping finance the sale of U.S. exports, primarily to emerging markets throughout the world. In fiscal year 2007, Ex-Im Bank authorized $12.6 billion in loans, guarantees and export credit insurance to support an estimated $16 billion of U.S. exports.

For more information on Ex-Im Bank, visit www.exim.gov.

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