After months of acrimony and debate, President Obama signed the Export-Import Bank Reauthorization Act of 2012 into law last May, which increased the Ex-Im Bank’s exposure limit by 40%. And while the legislation also included measures to increase oversight, a close eye must still be kept on the activities of the bank.
Ex-Im has been holding a number of events for small businesses claiming “attendees will learn how they can increase export sales in challenging economic times.” And while in this time of fiscal peril in America, the success of small businesses is vital, there is a gleaming paradox: Ex-Im Bank’s track record of subsidizing big business.
The fact is that the bank doles mega-loans out to huge companies that do not deserve or need subsidies. One of these corporations is the Boeing Company, which received almost 90% of all the Ex-Im’s loans in 2009. Columnist Howard Rich also noted that Boeing has “benefited from $8.4 billion in Ex-Im loans in 2009, $6.4 billion in 2010 and $11.4 billion in 2011 – gobbling up the overwhelming majority of the bank’s lending capacity.”
Ex-Im Bank also gives money to foreign companies, such as Air India, which puts American airline competitors at a severe disadvantage and enables foreign companies – some of which are near bankruptcy and propped up by governments – to compete at the expense of the American taxpayer costing our nation jobs.
Ex-Im has even given money to corrupt and now bankrupt companies, sending corporate subsidies to infamous energy giants like Enron and Solyndra. More recently, Ex-Im Bank loaned $9.2 million dollars to Abound Solar, which is now declaring bankruptcy and may cost U.S. taxpayers $40 million to $60 million after its assets are sold off.
Even President Obama called the Export-Import Bank a “fund for corporate welfare” in 2008, before changing his position after the election. And when Congress was debating reauthorizing the bank earlier this year, conservative senators like Jim DeMint stepped up to the plate, decrying the Bank’s taxpayer supported loans, which exposes taxpayers with these highly dubious loans.
Knowing that its reputation has taken a hit, Ex-Im Bank has been preparing for its next battle in the realm of public perception. The bank has started a comprehensive public relations campaign by trying to reframe itself as an agency that is aiding small businesses with its loans. The underlying purpose of the campaign is that it will help inoculate the bank from rhetoric that might jeopardize its existence in the future. As a result, Ex-Im has held events across the country to help establish itself as an organization that is friendly to small businesses.
But don’t be fooled. There’s no real connection between the Export-Import Bank and small business, or job creation for that matter. The bank’s activities simply distort the market, discourage innovative solutions in the free market and create an unleveled playing field.
The truth is there is an end in sight to the market distortions perpetuated by the Ex-Im Bank with the reforms passed in Congress which authorize the Treasury Secretary to end the subsidies and sideline the crony-capitalism. But for now, we must ensure Ex-Im isn’t allowed to fool the American people into thinking they are focused on meeting the needs of small businesses, while at the same time serving as “Boeing’s Bank.”
Until we can eliminate the need for it entirely, the bank must recognize it threatens U.S. industry and employment, while placing at risk taxpayer dollars. And no amount of self-promoting bus tours across America will change this.