The U.S. Export-Import Bank is one of the most blatant and indefensible examples of corporate cronyism by the federal government. Started 80 years ago as a protectionist, New Deal program, the Bank lingers on like a festering sore on America’s lip that just won’t heal – because Congress can’t leave it alone.
The Ex-Im Bank’s charter should have expired long ago, but Congress continues to fund it under the pretense that it is necessary to stimulate exports from American companies. In reality, the Bank hands out billions of taxpayer dollars to unsound companies based on political favoritism. Often, these companies are not even based in America.
The latest example is a $700 million loan to the richest person in Australia, to invest in the Roy Hill mine project. This project is now set to incur huge losses next year, estimated to top $10 billion. Far from being ruined by an unpredictable, uncontrollable market event, the outlook for the mine was gloomy right from the beginning, with analysts noting serious problems with iron ore prices. Apparently Ex-Im didn’t get the memo.
This is not an isolated incident. Most people remember the Solyndra fiasco, where a solar energy company propped up by taxpayer money crashed and burned in a very public way. What most people don’t realize is that the Ex-Im Bank was busily giving guaranteed loans to Solyndra while it was merrily tripping down the path to failure.
There was also the case of Abengoa, a Spanish green energy company mired in more corruption than a Dashiell Hammett novel. Like Solyndra, Abengoa was heavily propped up by Ex-Im loans.
The Ex-Im Bank’s charter expires at the end of June. If Congress does nothing, funding for the Bank will stop and billions of your dollars will stop being handed out to corrupt, insolvent companies. But Congress has introduced a bill that would keep the Ex-Im Bank in business, a bill that cannot be allowed to succeed.