The United States Export-Import Bank is essentially a microcosm of some of Washington's biggest problems, from the corruption it encourages, to putting taxpayers at risk, to the cronyism it facilitates.
The alleged purpose of the Bank is to "facilitate exports and imports and the exchange of commodities between the United States and other Nations." That sounds harmless, perhaps even helpful, until the Bank's actual operations are exposed. For proof of the Bank existing in part to advance political ideologies, look no further than the Bank's backing of the failed solar panel company, Solyndra, which was the recipient of an Ex-Im Bank loan guarantee of $10.3 million. American taxpayers shouldn't be used as pawns in this ongoing game of political correctness and corporate cronyism, while free-market principles are trampled.
The Ex-Im Bank is one mechanism - among many in Washington - that facilitates the exchange of political favors under the guise of boosting the economy and growing American jobs. This year, Sen. Kay Hagan (D-NC) boasted of helping a small business owner in her community, Jenny Fulton of Miss Jenny's Pickles. Sen. Hagan hosted a small business exporter forum where she connected the Export-Import Bank with Fulton. Hagan's press release notes the company "exports its famous pickles around the world." In April of 2013, Miss Fulton introduced Vice President Joe Biden at the Ex-Im Bank annual conference. Fulton said at that point, her company had been exporting pickles for over two years, to countries as far apart as China and the United Kingdom, and that by the end of 2013 they were set to do a million dollars in gross sales.
If the business was so successful already, it's unclear why Fulton needs access to American taxpayer backing via the Ex-Im Bank to "start shipping [her] product label to countries overseas," as Sen. Hagan's March 2014 press release.
Created in 1934 by Franklin D. Roosevelt, the Bank should be obsolete by now, but with politicians like Kay Hagan benefiting politically -- she is touting praise from a "Republican small business owner" -- ending the Bank has proven a challenge. Another important point, however, is that the main beneficiaries of the Bank's largess are not small business owners like Miss Fulton. On the contrary, Boeing receives 80 percent of the Bank's loans:
In the banking industry, the U.S. Export-Import Bank is commonly referred to as Boeing's Bank. And it's not hyperbole. While the taxpayer-backed Bank claims nearly 80-percent of its loan guarantees go towards small businesses, the overwhelming majority of the total dollar amount goes to Boeing. By some estimates, the massive multinational aeronautical company receives upwards of 80-percent of the Ex-Im Bank's taxpayer-backed loan guarantees.
Interestingly, 85 percent of the Bank's guarantees made to Russian companies center around Boeing. We've noted previously, "According to the Bank's 2013 annual report, it guaranteed more than $580 million in export funding during the last fiscal year - up 177-percent from fiscal year 2012." How did Russia get so cozy with Ex-Im? Lobbyists:
Billionaire Russian businessman Gennady Timchenko, a long-time associate of Russian President Vladimir Putin, plans to seek U.S. government-backed funding to buy luxury aircraft, Reuters has learned.
To smooth the path for financial backing from the U.S. Export-Import Bank and allay possible U.S. government concerns about him, Timchenko hired lobbyists from powerhouse Washington law firm Patton Boggs, according to emails and documents viewed by Reuters.
These folks know how to work the system, and Putin's buddy Timchenko has the money to hire them to do his bidding. Taxpayers don't stand a chance when this kind of corruption is taking place.
But we'd be remiss not to point out billionaires in other countries making transactions with the Bank. Australia's richest person (reportedly worth $17.7 billion), dubbed the "welfare queen" by The Australian Financial Review, was more than happy to accept $700 million in American taxpayer backing via the Bank for her company:
The Australian Financial Review explained "Government export credit agencies including the Ex-Im Bank in the US, as well as Japan and Korea, were crucial in helping the massive debt-funding deal over the line" because "Commercial banks and bond investors were reluctant to shoulder all the risk."
When announcing the deal, U.S. Ex-Im Bank downplayed the risk, instead touting the "$694.4 million loan to Roy Hill Holdings of Australia [was] contingent upon the purchase of U.S. mining and rail equipment from Caterpillar Inc., GE, and Atlas Copco."
By its nature, the Bank needlessly puts American taxpayers at risk, because it provides loans and credit insurance to U.S. exporters and foreign purchasers that private lenders have deemed too risky.
Ending the Export-Import Bank is long overdue. As we often do, we hearken back to then-Senator Obama's words about the Bank: it's "little more than a fund for corporate welfare." For the sake of taxpayers and ending cronyism and corporate welfare, 2014 should be the year Congress makes that happen.