It’s been a long, miserable summer for the Export-Import (Ex-Im) Bank. Members of Congress have returned to Washington to find the Bank’s fate resting squarely in their hands. Ex-Im’s charter will expire on September 30 unless Congress acts to renew it, and given the events of the last few months, that reauthorization looks increasingly doubtful.
House Majority Leader Kevin McCarthy (R-Calif.), and numerous other lawmakers, have already called for the Bank’s expiration. It’s bad enough that some 60 percent of Ex-Im financing went to just ten large corporations. Among its top beneficiaries are such giants as Boeing and GE, companies that are doing just fine without taxpayer-backed subsidies courtesy of the Ex-Im Bank. And so far this summer, evidence against the Bank has only continued to pile up.
Back in June, The Wall Street Journal broke the story that the Bank had suspended three employees and placed another on leave due to allegations of corruption. Two of them were under investigation for underhanded awarding of federal contracts. The other two, including Johnny Gutierrez (the only one of the four to be named), were accused of taking kickbacks from companies angling for Ex-Im financing. Gutierrez is specifically alleged to have taken cold hard cash from a company in Florida. These reports did little to inspire public confidence in the Ex-Im Bank.
In July, nearly two weeks after hundreds were killed when a civilian airliner was shot down by Russian separatists over Ukraine, the Bank finally decided to stop doing business with Russia. This announcement came days after U.S. House Financial Services Committee Chairman Jeb Hensarling (R-Texas) wrote the President a letter demanding the cessation of these Russian deals. Chairman Hensarling noted in his letter the inconvenient fact that two Russian state banks under sanction by the U.S. were also Ex-Im beneficiaries.
That same month, Johnny Gutierrez surfaced again, this time at a congressional hearing on the fraud allegations at the Bank. Gutierrez answered no questions, pleading the Fifth Amendment. Rep. Jim Jordan (R-Ohio), chairman of the subcommittee holding the hearing, revealed that concerns about improper behavior at the Bank go far beyond Gutierrez and the other three fired or suspended employees. Rep. Jordan announced that Ex-Im’s inspector general was examining 40 instances of potential fraudulent activity.
And August did not go well for Ex-Im. Early in the month, President Obama addressed the African heads of state gathered at the U.S.-Africa Leaders Summit, stating specifically that reauthorizing Ex-Im was “the right thing to do.” Simultaneously, the Bank announced a $3 billion commitment to financing deals in Africa over the next two years. Unfortunately, the Bank has a history of financing deals in countries with documented human rights abuses and autocratic rulers. Not to slow down Ex-Im bank’s reach, the Bank recently signed a “memorandum of understanding” with Angola, whose president has been in office since 1979. Like the dealings with Russian state banks, Ex-Im activity in Africa remains a source of concern and the prudence of this new $3 billion commitment is questionable.
In addition, August saw the revelation that the Bank’s spending on itself was just as problematic as its spending around the world. The Hill newspaper, citing documents from the House Financial Services Committee, reported that the Ex-Im Bank has shattered the ceilings of their travel budgets for the last three fiscal years, overspending by $3 million. The reason for this travel? “[T]o build public support for the bank,” according to the paper.
If Ex-Im truly wants to build public support, the freewheeling spending on employees’ travel seems a strange way to go about it. They might also want to start by addressing the rampant cases of fraud riddled within the organization or at least allow congressional investigators to conduct effective oversight. Or, they could re-evaluate their dealings with countries like Russia, Angola, Rwanda or Cameroon.
But it may be too late for all that. The Ex-Im Bank might have finally backed itself into a corner, and when Congress returns, they might decide that the best way to save it is to simply shut it down.
David Williams is president of the Taxpayers Protection Alliance.