Export-Import Bank: Reform Now or be Shut Down
February 27, 2015
As talk in Congress rises for extending the Export-Import Bank (Ex-Im) of the United States' charter, Diane Katz, research fellow at the Heritage Foundation, argues closing the bank is the only solution to the litany of problems it has caused. Nevertheless, U.S. lawmakers have introduced legislation to reauthorize the Ex-Im charter through 2019, which includes reforms to some bank procedures.
However, in spite of past reforms instituted by previous Congresses, Ex-Im has not fully complied with risk-management standards.
- The Office of Inspector General and the Government Accountability Office have repeatedly documented the bank's mismanagement, dysfunction and risk.
- No amount of bureaucratic tinkering can shield taxpayers from bailouts in the event that bank reserves run dry — as occurred in the 1980s — nor will it protect American businesses from the disadvantages of the U.S. government subsidizing their foreign competitors.
- The bank serves just 0.5 percent of small businesses nationwide. As it is, the bank finances less than 2 percent of total U.S. exports (by value). The recent record levels of American exports indicate no shortage of private financing.
Therefore, Congress would do well to consider the various drawbacks related to reauthorizing the Export-Import Bank, which includes distortions in the distribution of labor and capital and higher consumer costs. Thus, it is time to recognize the differences between support for big business and support for free enterprise.
Source: Diane Katz, "Export-Import Bank Impervious to Reform," Heritage Foundation, February 24, 2015.
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