The U.S. Export-Import Bank, which provides government loans to businesses (some of whom, like Boeing, have extensive ties to the government), is not having a good summer. This is a problem for the agency, as its charter is up for renewal in September.
Accusations of Corruption
The Wall Street Journal reports [paywalled] that the bank has removed or suspended four officials for allegedly accepting gifts and attempting to steer contracts:
One employee, Johnny Gutierrez, an official in the short-term trade finance division, allegedly accepted cash payments in exchange for trying to help a Florida company obtain U.S. government financing to export construction equipment to Latin America, according to a person familiar with the inquiry. Mr. Gutierrez was escorted from the Ex-Im Bank building in April, said two people familiar with the matter….
Of the four employees, Mr. Gutierrez's responsibilities were most central to the agency's core mission of financing exports. Two of the others are being investigated over allegations of improperly awarding contracts to help run the agency; the third is being investigated over allegations of accepting gifts on behalf of a company seeking financing, according to people familiar with the matter. The identities of the three couldn't be fully corroborated.
In response, the White House said President Barack Obama will have "zero tolerance" for fraud and corruption at the agency.
Republicans Ready to Strike
Outgoing House Majority Leader Eric Cantor (R-Va.), who lost his primary in a shocker, was a firm supporter of the bank's corporate cronyism. His replacement, Kevin McCarthy (R-Cailf.), came out against the bank's reauthorization on Sunday. Today, Speaker of the House John Boehner (R-Ohio) declined to defend the bank. The Hill notes:
Boehner has supported the bank in the past, but in response to questions from reporters, he distanced himself from that position and deferred instead to the chairman of the House Financial Services Committee, Rep. Jeb Hensarling (R-Texas), an outspoken opponent of reauthorization.
"Listen, I have a different job than I had then," Boehner said following a private House GOP meeting. "My job is to work with our members to get to a place where the members are comfortable. Some people believe that we shouldn't have it at all. Others believe that we should reauthorize it with significant reforms, and we're going to work our way through this."
The Speaker might have been referring to his past votes as a rank-and-file member, but he voiced public support for the Export-Import Bank as recently as 2012, when he praised an agreement to reauthorize its charter that was struck between outgoing Majority Leader Eric Cantor (R-Va.) and Minority Whip Steny Hoyer (D-Md.).
Times seem to be changing.
Debunking the Defense
Promoters of the bank claim it helps promote U.S. exports and create jobs and allows America to remain more competitive in the world marketplace. Veronique de Rugy of the Mercatus Center (a contributing editor at Reason) trashes these arguments with graphs today. She notes that projects and jobs claimed by the Export-Import bank make up only a tiny percentage of exports and related jobs:
See more useful graphs here. Also, check out the August/September issue of Reason magazine, hitting the stands soon, where de Rugy describes the bank as "The Crony Capitalism Machine."