What is the Export-Import Bank? If you have never heard of it or what it does—you are not alone. Most Americans are only now seeing mention of it in the news and recently there was a lengthy hearing in the House in regards to whether the Export-Import Bank should continue to exist. In September, the Export-Import Bank is due for re-authorization. This bank originated in 1934 by executive order of FDR to help out the Soviet Union and the bank’s own mission statement declares that its loans assume “credit and country risks that the private sector is unable or unwilling to accept.”
When President Obama was first campaigning in 2008, he opposed the Export-Import Bank as a prime example of “crony capitalism”, but since then the Democrats have asserted that the Bank is necessary for creating more jobs and a level playing field for US companies. The companies that benefit from the Bank are predominantly large corporations, like Boeing, Caterpillar, General Electric, etc. that should not need such subsidizes. In fact, Rep. Jeb Hensarling, the chairman of the House Committee on Financial Services has called the Export-Import Bank, the “poster child of the Washington insider economy and corporate welfare.”
Defenders insist that the Bank’s risks to the taxpayer are minimal and that its investments make the taxpayers money, but earlier this year the Congressional Budget Office revealed that by using fair-value accounting, Ex-Im actually loses taxpayers hundreds of millions of dollars per year. In the 1980s, Ex-Im did run up billions of dollars in debt and was forced to seek a taxpayer bailout.
Like too many government agencies of late, there have been charges of mismanagement and corruption leveled at the Bank, still many in Congress feel like there just needs to be more reform. Sadly, reform measures were tried in 2012 when the last re-authorization was passed, but during a recent hearing on this issue, it was stated that these “reforms” were largely ignored by the Bank.
Isn’t it high time for the federal government to stop picking winners and losers in our “free market” economy? One step forward to stop the growth of federal intrusion into the market place would be to let the Export-Import Bank simply fade away in September.