R.I.P. Export Import Bank - Granite Grok

R.I.P. Export Import Bank

Export Import Banks are usually government agencies. They ensure the safety and growth of a country’s foreign trade. Creation of the U.S. version came in 1934. It was for providing low interest loan guarantees. It incentivizes American companies selling American products internationally. All good so far, right? Now, as Paul Harvey would say, it’s time for the rest of the story.

International trade

Export Import Bank specifically focuses on the foreign trade. They are to stay out of domestic American transactions. They work in accordance with the concerned government departments. Interactions of the Exim Bank include overseas logistics and customs. It is important to ensure the export policies are being followed. The interests of the people in the trade receive safeguards. But since it’s a government agency what about your interests?

The Ex-Im bank has been reauthorized 16 times since it was created in 1934. It is the essence of socialism, which is government allocation of capital. The Export-Import Bank is a reminder that the rhetorical discord is loud but not always meaningful. That is often true between our political parties who greatly exaggerate their actual differences.

Where the rubber meets the road

Well as it turns out, companies do fail to repay the loan. The loan losses are picked up by you and me. That’s right; the American taxpayers foot the bill. That’s a bad thing. The Export Import bank provides a subsidy to companies. It also shifts the risk of default to the taxpayer. Foul! It does this by providing below market loans to business. It also guarantees the credit extended to foreign banks.

Over the years the Export Import Bank has made itself the poster child for government favoritism. It has had many questionable dealings. Not only questionable based on favoritism but also for corruption. They are the definition of a lose – lose situation.

There are a few companies who are beneficiaries of our largess. The No. 1 buyer of exports subsidized by Ex-Im between 2007 and 2013 was Pemex… It is the notoriously corrupt petroleum company owned by the Mexican government. The other biggest beneficiaries of Ex-Im subsidies are: State-owned Kenya Airways, State-owned Air China, Russia’s state-owned bank VEB which is currently under U.S. sanctions for bad behavior and Roy Hill mining, which is owned by Australia’s multibillionaire richest woman, Georgina Hope Rinehart.

Small business?

The supporters of the Export Import Bank assert its loans go to small business. Boeing, if you call that a small business, at one point got 70% of all Export Import Bank loan guarantees. They were also beneficiary of 40% of its total activity. Boeing has moved a significant portion of its production activity to China. That’s how Boeing has repaid your support. In 2014, in 17 Ex-Im transactions the primary borrower was the Export-Import Bank of China. Riddle me that one Batman.

Job creation?

The supporters of the Export Import Bank also claim it creates jobs. That may be true, but it is only half true. The Air Transport Association counters that it has killed 7,500 domestic U.S. airline jobs. Exactly how many jobs were lost with the Boeing-China move, who knows but the smart money says it was tens of thousands. Ex-Im backed $3.4 billion in financing to Emirates Airlines.

Balance of Trade?

The supporters of the Export Import Bank say it improves the balance of trade. It is necessary for U.S. business to compete globally. Well, not so much actually. With or without the Export Import Bank the U.S. export market changes little. Not only that, it has provided billions to countries like Russia, Pakistan and Venezuela. Countries that, do not have America’s best interest at heart.

What should congress do?

Here’s the bottom line. The authorization for the Export Import bank expires September 30, 2019. We should not renew its charter. We should get our government out of the business of picking winners and losers in international trade. The applicable technical phrase for this is; the government sucks at doing it. Government winds up giving your tax dollars and mine to countries that don’t even like us. How does that help us again?

What should you do?

What do you say? Pick up that smartphone or computer keyboard. Punch out a message to your senators and congressmen. Tell them you’ve been ripped off enough. It’s time for them to take their hand out of your pocket. Tell them to do what they usually do for you… nothing. They need to let the Export Import bank die. Let it pass quietly into the night on September 30th.

https://kuster.house.gov/contact/email-me

https://pappas.house.gov/contact/email-me

https://www.shaheen.senate.gov/contact/contact-jeanne

https://www.hassan.senate.gov/contact/email