Financial Audit:

Export-Import Bank's 1989 and 1988 Financial Statements

AFMD-90-80: Published: Jul 19, 1990. Publicly Released: Jul 19, 1990.

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GAO examined the financial records and internal accounting controls of the Export-Import Bank of the United States (Eximbank) as of September 30, 1989 and 1988, and related statements of income and changes in retained earnings and of cash flows for the years then ended.

GAO found that: (1) the Eximbank fiscal year (FY) 1989 financial statements present possible losses totalling $4.8 billion associated with its $12.1-billion foreign loans and claims portfolios; (2) the 1988 financial statement had been changed to show the losses associated with the impairment of the foreign loans and claims portfolios that occurred prior to FY 1989; (3) a reported $1.9-billion net loss in FY 1989 was principally due to the continued impairment of Eximbank foreign loans and claims portfolios; and (4) a one-time exposure fee that Eximbank began assessing in May 1987 would not improve the negative interest rate spread on most of its current portfolio.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Implementation of the Federal Credit Reform Act of 1990 provides for: (1) appropriation of budget authority to cover costs of providing loans and guarantees before incurring new obligations and commitments beginning October 1, 1991; and (2) appropriations to cover costs of loan obligations and guarantee commitments in place before FY 1992. This will gradually eliminate the bank's negative equity.

    Matter: Congress should implement a recapitalization plan for Eximbank that would: (1) restore the bank's equity position to a positive level as measured by generally accepted accounting principles; and (2) provide a means for ensuring that the bank maintains a minimum positive level of capital despite any future losses it may incur in fulfilling its mission.

 

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