Export-Import Bank Must Go
After years of negligent investment practices, political favoritism and corporate welfare, the Export-Import Bank is again coming under fire from the U.S. Congress. Senator Mike Lee and Representative Justin Amash this week sponsored legislation that would repeal the Ex-Im Bank in its entirety. The gentlemen should be congratulated; their effort represents the best option in terminating one of the worst examples of crony capitalism that exists in our Federal Government.
Every year, the Ex-Im Bank is allowed to spend billions of dollars on politically-favored companies throughout the U.S. without a sliver of accountability. It actively damages American industries; distorting the market in order to give taxpayer funds to the most politically connected. Moreover, the Bank continues to ignore explicit instructions from Congress to reform its methods. The Ex-Im bank operates without discretion, accountability or transparency.
Examples of its ineptitude are plenty, but Solyndra is one of the most telling. A company going bankrupt receives millions from the Ex-Im Bank thanks to its board's close ties to those in the administration. It isn't a rare theme. A company named Miasole also was the recipient of the Ex-Im Bank's largesse and it is owned by the Chinese and competes directly with American employers. But the main beneficiary of the Ex-Im Bank's funds, however, is the airline industry -- namely, Boeing.
The Ex-Im Bank distorts the market by loaning the vast majority of its budget to support just one company at the expense of others. As a case study, consider the Ex-Im Bank's FY2012 Budget: over 82% of it went to subsidizing the airline manufacturer Boeing -- the equivalent of $12.2 billion dollars. By loaning billions to foreign companies to help them buy new Boeing products, the Ex-Im Bank manipulates market pricing, jacking up the cost for any domestic companies still trying to compete. It is estimated that the Ex-Im Bank costs the U.S. airline industry an estimated $684 million and up to 7,500 jobs.
Congress has previously taken notice of the Ex-Im Bank's corrupt lending practices. Last year, it passed strict resolutions demanding that the Ex-Im Bank embrace a more transparent and accountable lending process. A set of new economic impact procedures were drafted with the intent of forcing the Bank to evaluate the costs and benefits of all its transactions before they could cost American jobs. Additionally, the Ex-Im Bank was required by Congress to "substantially reduce, with the ultimate goal of eliminating" support for the sale of wide-body aircraft.
But the Bank did nothing to actually engage in these very necessary reforms. It continues to provide billions in subsidies and guarantees to foreign companies for the purchase of Boeing's wide-body aircraft. It additionally took a further step back from responsible thoughtful lending -- choosing instead to approve 100% of loans associated with Boeing transactions. Simply put, the Ex-Im Bank has actually worsened its habits since Congress attempted to improve them.
For this reason, Lee and Amash's legislation to repeal the charter of the Ex-Im Bank is gaining support throughout Congress. Today, a U.S. House hearing will discuss the Ex-Im Bank's practices and presumably the Lee/Amash legislation, which strips the organization of its legal authority, effectively ending its ability to dole out billions. The effort deserves the backing of anyone who claims to favor free markets, competition and a robust private sector.
The Ex-Im Bank needs to be disbanded. It is a colossal failure with regard to its intended purpose, and a prime example of government run amok. Let's hope Congress gets the message and begins work on this noteworthy objective starting today. Our economy would benefit tremendously if it did.
