Last week, the Washington Free Beacon broke the story about former Democratic governor of New Mexico Bill Richardson and his role in an arrangement that transferred tens of millions of dollars in federal loans to Spanish conglomerate Abengoa. It seems the former governor, who sits on the International Advisory Board for Abengoa, is also a member of the U.S. Export-Import Bank’s Advisory Committee. And wouldn’t you know it: the federal loan given to Abengoa came directly from, you guessed it, the U.S. Export-Import Bank.
Don’t act so surprised.
The story about Mr. Richardson was picked up by a number of outlets, no doubt because Richardson’s tale is just one of many that re-enforces the now impossible-to-ignore truth: the Ex-Im Bank is an organization that exists to promote crony capitalism.
It wasn’t always supposed to be this way.
The Ex-Im Bank was originally established for the noble purpose of facilitating the export of American goods to countries and entities that otherwise could not afford them. As its budget has ballooned to $140 billion, however, the Ex-Im Bank has been consumed by what appear to be backroom deals between well-connected lobbyists, politicians, and corporate interests. While a recent public relations campaign by the bank and its allies focused on the many supposed benefits it provides to small businesses, stories like Richardson’s offer a stark reminder that the Ex-Im Bank continues to funnel billions of dollars backed by U.S. taxpayers into often risky ventures.
And who decides where all that money is invested? That would be the Ex-Im Bank Advisory Committee – the same committee that former governor Richardson is a member of.
The Ex-Im Bank has long suffered from a serious lack of transparency and oversight. With their massive budget, the Ex-Im Bank’s Advisory Committee doles billions of dollars to their friends and political allies. Consider this: the Ex-Im guaranteed funds totaling tens of millions for Solyndra, Amonix and Abound Solar, all of which experienced extraordinary financial difficulties. And those are just the most recent bad decisions. The Ex-Im Bank perverts the concept of open market competition by picking winners based off of political standing rather than merit. This is the true definition of crony capitalism.
Reading up on the subject can be illuminating. One of the best examples of the Ex-Im Bank’s cronyism is its relationship with airplane manufacturer Boeing. During Fiscal Year 2012, the Ex-Im Bank authorized $14.7 billion in loan guarantees and direct financial aid. Of that total, 82.7 percent, or $12.2 billion, went directly to one company: Boeing. How and why did a company that raked in nearly $70 billion in revenue in 2011 receive so much additional assistance from a federal agency? One need only think back to where that money comes from: the bank’s much heralded Advisory Committee.
A recent press release announcing the 2013 Ex-Im Bank Advisory Committee notes that this year’s board includes Christine Gregoire, governor of Washington, where Boeing is based, and Owen Herrnstadt, the director of trade and globalization for the International Association of Machinists and Aerospace Workers (IAMAW), the main union that engages in bargaining with Boeing and represents millions of its workers. Add to that the fact that President Obama’s export czar Jim McNerney is actually Boeing’s chief executive officer, and it’s a wonder that 100 percent of the bank’s funds didn’t flow directly to the massive corporation.
Written into the Ex-Im Bank’s most recent re-authorization bill are directions for the Secretary of Treasury to begin winding down the institution. Since Secretary Geithner was unwilling to follow these directives and act, we can only hope that the incoming Treasury Secretary will finally adhere to law and wind down this crony organization that is imprudently doling out subsidies to the best-connected companies, while putting American taxpayers at risk.