Editor’s Note – Distorting the markets – that is what the Export/Import Bank really accomplishes, or should we say is a huge failure. This of course leads to political usefulness and it has been a tool used often. Obama’s selection of Fred P. Hochberg to run the bank is just another political pay back for support of crony capitalism.
“OpenSecrets classified Hochberg as a major fundraising ‘bundler’ for the 2008 Obama campaign, collecting between 100,000 [sic] and $200,000.” He is the son of the founder of the Lillian Vernon mail order empire.
This bank makes great crony deals that defy logic and reason and you the taxpayer are the one on the hook, especially when their investments go belly-up. Please read the following then watch the short video below. It explains an awful lot and we need to stop the bank and Hochberg from being re-confirmed.
Read more here, and more Ex/Im crony capitalism here. There are many other examples as well.
It’s time to close the doors of the Export-Import Bank
By AL CARDENAS – Washington Examiner
Amid a flurry of recent scandals, one management failure is consistently overlooked — the Export-Import Bank of the United States. The Ex-Im was created during the Great Depression to help spur economic growth through international trade.
Originally, the agency sought to facilitate trade by financing and insuring foreign purchases of American goods. The Ex-Im’s goal was to increase the competitiveness of domestic companies by placing them on even footing with their foreign competitors.
Unfortunately, this plan has been derailed and the bank has become a detriment to American employers. The Ex-Im now reigns as the king of corporate welfare doling out subsidies to some of America’s wealthiest corporations.
Boeing, a company that earned roughly $80 billion in revenue last year, is the largest benefactor of Ex-Im’s corporate welfare. In 2012 alone, Boeing received more than 82 percent of Ex-Im’s total loan guarantees or roughly $12.2 billion.
What is worse is that these loans allowed foreign airlines to purchase Boeing aircraft at below-market rates and with advantageous terms; meanwhile, American carriers are forced to bear higher costs and less favorable loan terms and thus placed at a competitive disadvantage to their foreign counterparts.
According to some estimates, the Ex-Im has caused the U.S. airline industry to lose up to 7,500 jobs and approximately $684 million.
In addition to financing foreign rivals and distorting global markets, the Ex-Im also perverts the domestic economy by guaranteeing loans to companies of questionable financial health. Perhaps the most prominent example is Solyndra, a now bankrupt company that was politically connected to the Obama administration, benefited from a generous $10.3 million Ex-Im loan guarantee.
Solyndra is not the only instance of Ex-Im’s dubious track record; it has also guaranteed loans to a number of bankrupt companies, including Enron, threatening the loss of millions of taxpayer dollars. Simply put, the federal government’s track record of picking winners and losers is abysmal, especially considering the monies are backed by the goodwill of Joe and Jane Public.
In 2012, Congress passed legislation that reauthorized Ex-Im’s charter as lawmakers were no longer able to turn a blind eye to the bank’s egregious actions. As a result, the reauthorization legislation included language that called for Ex-Im officials to rein in their lending practices.
Such language is critical because a reduction of loan guarantees helps control America’s exposure to risk, ultimately limiting taxpayers’ liability for a financial disaster, while also stemming policies that hurt employees and employers.
Further, the legislation was significant because it mandated that the Ex-Im analyze the impact of its financial transactions on American jobs. Yet, Ex-Im has thwarted congressional demands and refused to comply with the recent legislation.
Led by Ex-Im president Fred Hochberg (who’s currently up for Senate re-confirmation), the bank continues to authorize the subsidized sale of aircrafts at the expense of American carriers. In fact, the Ex-Im has been taken to court for failing to follow the law; specifically, for allegedly failing to comply with Congress’ mandate to consider the economic impact of its loans and make public any methodological guidelines for use in economic analyses.
In response to the risk posed by Ex-Im’s actions, Sen. Mike Lee, R-Utah, and Rep. Justin Amash, R-Mich., recently introduced bills in their respective chambers to wind down the federal agency. The American Conservative Union has previously supported efforts to shut down this antiquated agency and stands with Lee and Amash in support of their recent legislation.
While it is important for America to increase exports, it is imperative that we do so in a fashion that does not promote cronyism by picking winners and losers, and put American jobs at risk. The American Conservative Union endorses the Lee-Amash legislation and an end to corporate welfare.
Al Cardenas is chairman of the American Conservative Union (ACU).