Export-Import Bank

All Roads Lead to Washington as Congress Resurrects Ex-Im Bank

Crony capitalist institution could still be crippled if Sen. Mitch McConnell takes action.

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After allowing the Export-Import Bank of the United States' charter to lapse June 30, Congress voted to revive it this month on the back of an expensive highway bill. The agency is the modern iteration of a New Deal-era program that mostly extends loans and loan guarantees to foreign companies to buy U.S. goods and services, backed by your hard-earned tax dollars. It's an outrageous example of corporate welfare for companies with no need of government subsidies, and its reauthorization is yet another sign of how much power the business lobby and the U.S. Chamber of Commerce hold.

However, though Congress' commitment to this unhealthy and unfair marriage between big government and big business is depressing, it still isn't business as usual at the bank. According to the bank's charter, the board of directors is made of five members, and three board members are needed to achieve quorum. Without three members, the agency can only approve transactions valued at less than $10 million.

As it turns out, the bank has been missing three members since July. The only two board members remaining are the bank's chairman, Fred Hochberg, and its vice chairwoman, Wanda Felton, while there are vacancies for two Republican board members and one Democratic board member. So far, the only nominee President Barack Obama has put forth is Patricia Loui-Schmicker, a Democrat whose term on the bank's board expired Jan. 20.

The stakes are high for anti-crony advocates because not approving the third board member (whether Republican or Democrat) would effectively cut big businesses out of the Ex-Im Bank. The bank dataset shows that 84 percent of the values of approved deals over the past eight years have been above $10 million. Also, though the majority of deals approved are below the $10 million threshold, they still only represent 16 percent of the total dollar amount approved.

These data provide additional evidence that the bank is not in the small-business "business," as its supporters claim. In fact, in 2014, some 65 percent of the bank's activities benefited 10 giant U.S. companies, with Boeing and General Electric leading the pack. The companies and their customers have access to the capital market and don't need the support of government to prosper. Not surprisingly, these companies have also bankrolled the lobbying effort to revive the bank.

Now, this situation raises some interesting political dynamics. For instance, during the past two years of debate over the renewal of the bank's charter, Democrats have claimed that they support the program because of its benefits to the small-business side. This development should make them happy.

On the other side of the political aisle, it will be interesting to see what Senate Majority Leader Mitch McConnell and Senate Banking Committee Chairman Richard Shelby do about the nomination of Loui-Schmicker. Senate leadership can decide whether to move forward with her nomination hearing or, as is typically done, wait to pair her with a Republican nominee because there are currently no Republicans sitting on the bank's board.

The two men are key players here, because McConnell can decide whether or not he approves of the president's Republican nominee and Shelby presumably has some amount of control in deciding whether or not to schedule a hearing for the nomination of that third (and possibly fourth) board member. Both men are theoretically against this crony-capitalist boondoggle.

McConnell and Shelby have many reasons not to schedule a nomination hearing, including the fact that it doesn't make much sense for Republicans to get any of President Obama's nominees through in the last year of his term.

That's the theory, of course. The reality is that in Washington, politicians make deals. It rarely works to the advantage of taxpayers and consumers, but it doesn't stop the alliances from being made and the deals from being sealed. This time may be no different.

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12 responses to “All Roads Lead to Washington as Congress Resurrects Ex-Im Bank

  1. Did not know about the lack of quorum. That’s encouraging; maybe it will stay out of action long enough to show how unnecessary it is. Will Boeing and Caterpillar have boom years? One can only hope. There’s also the matter of bragging of having voted to revive the ExIm Bank but withholding votes on board members, nice political cover.

  2. Just another example of why I, an actual small businessesman, haven’t voted for a Republican in a decade. This is simply disgusting after all the great work by Veronique and many others who forced this Crapitalist awfulness into the view of the larger public. It’s stuff like this that has created the anger that has given us Mr. Trump. Nice going Republican legislators. You will reap what you sow.

    1. Which begs the question who have you voted for?

      The Ex-Im Bank had been refunded because of the Republicans. It is being reinstated because some Republicans joined a United Democrat caucus. Which is worse, the GOP’s lack of party discipline on this issue or Democrat’s absolute commitment to their Team?

    2. So you voted Democrat, the party that claims to support small businesses, but is clearly lying about that?

    3. So you voted Democrat, the party that claims to support small businesses, but is clearly lying about that?

  3. Crony capitalist institution could still be crippled if Sen. Mitch McConnell takes action.

    I’m not gonna hold my breathe waiting for old Turtle Head to do something.

  4. If you read Reason you know how I voted – angrily. Hit every L on the ballot (GA has easy ballot access) and leave the rest blank

  5. If this can’t be killed, why not take them at their word? Limit all grants to under $500000, and to companies with no more than 100 employees…

    1. Aw, that’s adorable, you think the pretend champions of small business will act against big business!

      Seriously though, I totally agree.

      1. I think such a scheme would might both sides save face.

  6. From the article above:

    “The bank dataset shows that 84 percent of the values of approved deals over the past eight years have been above $10 million. Also, though the majority of deals approved are below the $10 million threshold, they still only represent 16 percent of the total dollar amount approved.”

    These two sentences directly contradict one another.

    First sentence says 84% of all deals are “above” $10 million.

    Second sentence though the majority of the approved deals are “below” $10 million…..

    Which is it? Are 84% (clearly a majority) of the deals above or below $10 million?

    1. It’s not contradictory, just strangely worded. The majority (84%) of money goes to big deals. The numerical majority of deals are small deals.

      Just imagine Bernie Sanders saying it, and replace “deals” with “population” and “corrupt government” with “THE SYSTEM IS RIGGED!”

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