The Export-Import Bank is drawing fire from critics again after two congressmen introduced a bill for reauthorization. Rep. Rick Larsen, (D-Wash.) and Rep. Don Manzullo, (R-Ill.) want the Export-Import Bank Reauthorization Act of 2012 passed with a major tweak to the status quo—a 40 percent increase in funding.
Fiscal conservative groups like the Club for Growth are publicly opposing the bill. Barney Keller, communications director for CfG, told Examiner that Ex-Im is the “Fannie Mae of export finance.”
Keller said the bank is “a slush fund for corporate welfare,” and his organization wants the bank shut down.
President Franklin D. Roosevelt, the Democrat whose name is synonymous with New Deal programs during the Great Depression, started the first Ex-Im by executive order intent on financing U.S. trade with the Soviet Union. Roosevelt then started a second bank to do the same with Cuba. Eventually the banks were merged and more countries were added to the beneficiary list.
Larsen penned an editorial explaining why he wants the bank reauthorized. Larsen wrote:
“Although most American exports are privately financed, private institutions are sometimes unable or unwilling to take on certain credit or country risks in export trade, such as the risks involved in exporting to countries with weaker political and economic systems. In these cases, the Ex-Im Bank closes the void by providing export financing.”
However, public disclosures about Ex-Im have not only given watchdog organizations concern, but fiscal conservatives in general.
Even traditional media outlets have published articles about questionable practices at Ex-Im.
WFAA TV (Dallas-Ft. Worth) stunned political observers with the revelation that some Ex-Im loans went to people with connections to Mexican drug cartels.
CfG published a list of Ex-Im’s top ten clients, including some startling allegations: Solyndra (bankrupt), Mexican drug cartels, an oil company with ties to the Russian Mafia, Enron, Air India, First Solar (to export solar panels to itself), China National Nuclear Power Corp., a Spanish company selling windmills to Honduras, the now bankrupt Abound Solar and Boeing. The Club also said Boeing receives 44 percent of Ex-Im “handouts.”
In late March, Floridians learned that an established Miami businessman, Rafael E. Cuarezma, 44, a naturalized U.S. citizen who was born in Nicaragua, had been convicted of defrauding the bank. The government is seeking $355,046.08 in restitution.
The Office of the Inspector General at Ex-Im pointed out accountability problems in a report issued in March, 2012. The 38-page OIG report recommended changes, such as developing and implementing standards for performance and transparency.
It is likely that few taxpayers could even define what the Ex-Im bank is supposed to do, even as the bank’s supporters ask for $140 billion in funding as part of the reauthorization act.
Keller said the Club for Growth believes government should be as “limited as possible.” The Club issued a Key Vote Alert asking congressmen to vote against reauthorization, calling Ex-Im actions “nothing more than market-distorting subsidies that pick winners and losers in the private sector.”
WFAA pointed out that as early as 2008, Ex-Im had $213 million of bad loans to Mexican borrowers on the Texas border. Despite those and other losses, Ex-Im opened another branch in the same area.