Ex-Im's Working Capital Programs Benefit Big Businesses and Banks
August 28, 2015
On July 1, Congress failed to reauthorize the U.S. Export-Import Bank (Ex-Im Bank), and although the bank has many staunch supporters, large, politically connected firms were the primary beneficiaries of its policies, says Veronique de Rugy of the Mercatus Center. Small businesses did benefit from the Ex-Im Bank's working capital programs but overall these programs were a small component of the agency's operations.
- Large firms benefited from the Supply Chain Finance (SCF) program to the tune of $1.28 billion.
- During the same seven years 36 percent of working capital programs directly and indirectly benefitted large firms.
- Ford Motor Credit Company LLC, Caterpillar Inc, and Boeing Co. were the top three beneficiaries of the Ex-Im Banks's working capital programs from 2007-2014.
Small business did receive $11.3 billion in capital working programs from 2007-2014 with peak amounts of funding in 2012 at $1.85 billion. However, the working capital program transfers the risk of lending to taxpayers from the lenders, who are often big banks or individual corporations. Lenders such as PNC Bank, JPMorgan Chase and Wells Fargo can be reimbursed up to 90 percent of the outstanding loan amount through the Ex-Im Bank. Although Ex-Im Bank supporters maintain that the bank enables small business, policymakers need to remember that it is actually the large, politically connected businesses that are benefiting.
Source: Veronique de Rugy, "Ex-Im's Working Capital Programs Benefit Big Businesses and Banks," Mercatus Center, August 26, 2015.
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