Yesterday the House Financial Services Committee held a hearing on the Export Import Bank. Americans for Prosperity is urging lawmakers to oppose the agency’s charter reauthorization, which is set to expire at the end of September. We were disappointed to see the chairman of the Export-Import Bank, Fred Hochberg, fail to answer certain questions about the bank’s mandate and ongoing operations.
Here are six questions that the Export Import’s chairman left unanswered during his testimony yesterday:
1. It was recently reported that four bank officials have been accused of accepting gifts or kickbacks in exchange for steering federal contracts to favored companies. At a bank already ripe with cronyism, isn’t this just more evidence that the system is rigged in favor of the largest, most wealthy corporations – and against everyone else?
FACT: Four bank officials have been removed or suspended in recent months amid investigations that they were accepting gifts and kickbacks in exchange for steering federal contracts to favored companies. (Damian Paletta, “Officials At Ex-Im Bank Face Investigations,” WSJ, 6/23/14)
FACT: One bank employee helped a Florida company to “obtain U.S. government financing to export construction equipment to Latin America. . . . The agency’s credit committee agreed to guarantee financing for [a] project worth between $1 million and $5 million in Mexico, and a similarly sized equipment sale to the Dominican Republic.” (Damian Paletta, “Officials At Ex-Im Bank Face Investigations,” WSJ, 6/23/14)
2. How do you justify risking billions of dollars in taxpayer money on loan guarantee programs for green energy projects that many studies conclude are economically unsustainable?
FACT: Solyndra also received a $10 million loan guarantee from the Export-Import Bank. (Sallie James, “Expanding Ex-Im’s Mandate Is A Big Mistake,” Cato Institute, 3/14/12)
FACT: Abengoa, a company not based in the U.S., has received $3 billion. These numbers do not include green subsidies received from other agencies. (Veronique de Rugy, “Export-Import Bank Subsidy Beneficiaries,” Wall Street Journal, 5/29/14)
3. If the Export-Import Bank is so vital to jobs and the economy, why do such a high percentage of its loans and guarantees go to so few major corporations?
FACT: 90 percent of the bank’s loans and guarantees went to only ten major corporations in 2010. (Christine Harbin Hanson, “End the Export-Import Bank,” Roll Call, 5/05/14)
FACT: Export Import Bank is no friend to Main Street small businesses. In 2013 the top 10 beneficiaries received over 76 percent of all the taxpayer dollars doled out by the Ex-Im Bank — more $20 billion. (Eric Peterson, “The Export Import Bank’s Small Business Charm Offensive,” Town Hall, 6/26/14)
FACT: One usual claim is that small businesses account for 89% of the total number of Export-Import deals. This doesn’t take value into account. (Veronique de Rugy, “Big Business Cronies Rally To Protect Export-Import Bank,” Washington Examiner, 4/24/14)
4. How can the Export-Import Bank justify giving $24.4 billion worth of financial assistance to industries labeled “unknown”?
FACT: The second most-supported industry in the bank’s portfolio is labeled “unknown.” (Veronique de Rugy, “Portfolio Breakdown of Projects Assisted by the Export-Import Bank,” Mercatus Center, 5/12/14)
FACT: The bank has provided $24.4 billion worth of financial assistance to an industry labeled “unknown” since 2007. (Akash Chougule, “The Export-Import Bank and the Case of the “Missing” $24 Billion” AFP Blog, 5/20/14)
5. The Export-Import Bank is an extremely expensive agency to maintain. Yet it’s responsible for only a small share of the export market. Why can’t private sector take over the bank’s transactions so that taxpayer money is no longer at risk?
FACT: The Export Business Is Almost Completely Privatized As It Is. “98% percent of the $2.2 trillion in annual U.S. exports are financed without help from Ex-Im.” (Diane Katz, “The Export-Import Bank,” Heritage Foundation, 4/29/14)
6. A tenet of the bank is to “level the playing field” against foreign competitors that received subsidies from their own governments. But isn’t the vast majority of assistance making it easier for foreign companies to outcompete American ones – costing the United States thousands of jobs and hundreds of millions of dollars?
FACT: It’s Doing The Opposite. “In a letter to Congress last month, Delta estimated that Ex-Im cost the U.S. airline industry up to 7,500 jobs and $684 million a year.” (Editorial Board, “The Export Subsidy Boomerang,” WSJ, 3/03/12)