This week, the House Committee on Financial Services held a hearing on the Export-Import Bank, an institution uses American taxpayer dollars guarantee loans in the name of increasing exports (think of Fannie Mae for exporters). Chairman Jeb Hensarling (R-TX) made the following remark in his opening statement:
The Bank picks winners and losers in our economy by providing loan guarantees, export credit insurance, working capital guarantees, and direct loans to American exporters and purchasers of U.S. exports.
Some of those winners have included the likes of Enron and Solyndra - hardly worthwhile investments on behalf of the American taxpayer. A review of the Bank's top ten recipients includes companies like Boeing, General Electric and Caterpillar. I find it inconceivable that these companies would be in need of the government dole.
Put another way, the Bank ostensibly makes loans backed by taxpayers that the private sector is unwilling to make. If private creditors are unwilling to engage in these transactions, it begs the question why should the American taxpayer?
We have also noted on numerous occasions that the Export-Import Bank is just another facet of Washington cronyism. Using taxpayers as a backstop for loans to companies that could not otherwise receive them is an affront to the free market and a reckless risk the federal government forces upon taxpayers.
Backers of the Bank say that it does not really pose a significant threat to taxpayers, but Rep. Hensarling rebuts that claim as well:
Unfortunately, we need not look past Fannie Mae and Freddie Mac, the National Flood Insurance Program, or the Federal Housing Administration to know that it is perhaps impossible to provide government backing at no risk to hardworking taxpayers.
As Chairman Hensarling also noted, even the Obama administration has said that U.S. exporters should be allowed to "compete based on the quality and price of their goods and services, rather than on the quality of any officially-supported financing."