Export-Import Bank

Crony-Capitalist Export-Import Bank Loses Authorization for First Time in 81 Years!

The reprieve is temporary, but it's still a victory against corporatism at its worst.

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For the first time in 81 years, authorization for the Export-Import Bank (Ex-Im) has lapsed. Established during the Depression by Franklin Roosevelt, Ex-Im has become a leading symbol of crony capitalism. It guarantees loans and other support for foreign companies to buy U.S. goods. Unfortunately, the bank will be reauthorized within a few weeks, once Congress comes back in session and does whatever it needs to in order to dole out huge perks to the likes of Boeing, Caterpillar, and John Deere.

Reason columnist and Mercatus Center economist Veronique de Rugy has done as much or more than any single person to highlight the faulty claims and bad policy underwriting Ex-Im's existence (beyond writing countless articles and policy papers, she has also appeared many times before Congress on the matter). Here she is, talking about the bank's demise in the Wash Times:

This government bank claims to promote U.S. exporters by lending cheap, taxpayer-backed loans to foreign and domestic corporations. However, in the process, Ex-Im Bank puts millions of consumers, firms and workers at a disadvantage. As such, closing it down is an important first step in the battle against the unhealthy marriage between the government and corporate America….

Contrary to lobbyist talking points, the Ex-Im Bank is firmly in the "big business" business. On the domestic side, 40 percent of its activities benefit one giant company: Boeing. Over 60 percent of the bank's financing aids 10 giant beneficiaries, like Caterpillar, Bechtel, and General Electric. On the foreign side, the cheap loans go to state-owned companies like Pemex, the Mexican government's oil and gas giant, or Air Emirates, the airline of the wealthy United Arab Emirates….

It is critical that we consider the unseen victims of political privilege who pay for these benefits.

These victims are taxpayers who now bear the risk for $140 billion in liabilities. These victims are consumers who pay higher prices for the purchase of subsidized goods. These victims are unsubsidized firms competing with subsidized ones. They not only pay higher financing costs but also lose out when private capital flows to politically privileged firms regardless of the merits of their projects.

Read the whole thing here.

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  1. And you want to be my latex salesman.

  2. It can’t make any new loans but it will likely receive funds to operate for many years to unwind its portfolio. That’s plenty of time for its backers to reauthorize new loans.

  3. A few years before there was Smoot-Hawley that helped choke off trade,along with laws in the rest of the world.Instead of opening up free trade they payed the ‘right’ people,just like now.And then there are the agriculture controls.They did eveything they could to make a down turn into a ‘depression’.

  4. When can we expect a commercial with Iron Eyes Liz Warren standing by the roadside with a tear streaking down her cheek?

    1. She’s been a supporter of EXIM, so I doubt we’re going to see that any time, soon. Although I would enjoy the delicious irony tears.

      1. Yeah, that’s what I was referring to. She’s sad to see the EXIM go away.

        1. Ah, pardon my thickness on your post – sometimes my sarcasm meter goes out of alignment.

  5. Jeffrey Immelt has a sad. 🙁

    1. He’s threatening to move jobs overseas if the bank isn’t reauthorized.

      1. Go ahead Jeff, I’ll just restrict my flying to alloy tubes that are powered by RR.

  6. This is really remarkable. Thank you, Veronique de Rugy! You have performed a hero’s labor.

    1. Yaaay.

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  8. As much or more as?

    English major indeed.

  9. The stupid counter-argument is always “But if we don’t do it the the Russians or the Chinese will!!!”

    1. Let them. They deserve no better.

    2. Worse, there was a poster on “Conservative, pro-market” Hot Air who said because France does it for AirBus, we have to do it for Boeing, because ‘Murika. I noted that our airlines could just buy Airbus planes for a while at a tremendous discount with French taxpayers eating the losses and US companies taking advantage until that system collapsed before Boeing or another US manufacturer could become dominant again in a fair market, but I got no response.

      1. True, but governments have deep pockets and it would take quite a while for European subsidies for Airbus to bankrupt or collapse European governments.

        1. A Greece here, an Airbus there, pretty soon you have fighting in the streets of Germany over 1Billion-Euro notes.
          Wiemar, anyone?

  10. I work for Patton Electronics, a company of less than 200 people. We NEED the EX-IM bank to finance 70% of our business, which is overseas customers to whom we export our US-made products. Is that seriously cronie capitalism? No other bank is willing to make loans against foreign revenue expectations…

  11. Sickeningly hilarious NPR piece on the topic emphasized from first sentence on that it is pretty much only the Tea Party that opposes [most NPR listeners can stop listening right there] this thing that (several sources testify) is so good for American jobs. Nothing is mentioned that might possibly make their base audience think twice (60 per cent of it goes to Boeing, what was that?) If you were to construct a parody of bias . . . but no surprise there.

  12. Let it die, Rev; LET.IT.DIE!

  13. Why does Reason TV and Veronique de Rugy have to be dishonest (that’s putting it very politely) about Ex-Im Bank’s activities? The Ex-Im Bank does not lend a single dollar to foreign or domestic companies, not even a single penny.

    The fact is that there is no private sector competitor to what Ex-Im Bank does for American manufacturing.

    We have many foreign competitors in the world. 80 other countries have Ex-Im Bank’s and they will be very happy to eat our lunch. Why is Reason TV hurting American manufacturing and helping China, Germany and France?

    This action will hurt many American manufacturers and banks in the US and will hurt our country’s export sales.

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