Is the Export-Import Bank Another Fannie Mae or Freddie Mac?
May 15, 2012
The Export-Import (Ex-Im) Bank was started in 1934 as a way to help U.S. companies sell to the Soviet Union, where getting paid was often a dicey proposition. In recent years, it has mostly financed and guaranteed loans on U.S. exports, says Investor's Business Daily.
Unfortunately, the political agenda regarding the bank has made it increasingly unaccountable while simultaneously expanding its mandate and resources. The end result, it seems, will be a large and powerful institution with little oversight that, among other things, will be able to choose corporate winners and losers at will.
- The House of Representatives recently voted to expand the bank's loan portfolio by 40 percent to $140 billion.
- Among the bank's pet projects that have received enormous amounts of assistance are Solyndra and Enron, signaling the lack of accountability its administration is subject to.
- Furthermore, it has often provided help to businesses that had no need of it; indeed, Boeing benefitted from bank-provided assistance to foreign buyers to purchase the company's planes.
In these ways and others, the bank has strayed away from its original mandate, electing instead to prop up politically favored companies at the expense of the taxpayer.
Furthermore, the new structure of the bank leaves it open to unfair treatment, political favors and corruption.
- Starting in 2009, President Obama ordered the Ex-Im Bank to favor green projects -- and to give no money to any energy project that involves fossil fuels.
- Additionally, women and racial minorities will also receive preference for loans.
- The president has even considered allowing the bank to grant loans to domestic firms that don't even do business overseas.
Finally, because of the bank's now-expansive mandate, it will be brought into competition with regular banks in the private sector. Undermining an important source of their revenue is ill conceived, and further provides reason to shrink or eliminate the role of the Ex-Im Bank.
Source: "Is Ex-Im Bank Another Fannie Mae or Freddie Mac?" Investor's Business Daily, May 10, 2012.
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