The Ex-Im Bank needs fundamental reform to prevent it from continuing to adversely affect markets for American companies. As it is currently structured, it is little more than a corporate welfare system using taxpayer-backed funds, where Americans are left footing the bill for loans or guarantees that go south.
Loan default is an all too real possibility. Ex-Im has a record of making loans that are questionable. It recently made a $1.3 billion loan guarantee to Air India, a company that is four billion in debt and is in the process of being bailed out by the Indian taxpayers.
And recently, Ex-Im’s president Fred Hochberg stated that the bank doesn’t focus on loans to energy companies, but facts do not seem to corroborate his viewpoint. Ex-Im has made loans to companies that have become notorious such as Enron, Solyndra and First Solar, which is being investigated by Chairman Darrell Issa, chairman of the House Committee on Oversight and Government Reform, for suspicious business practices and attempting to influence key government officials.
This severely undercuts Hochberg, who said “[all Ex-Im Bank] products are only provided if the Bank is convinced that there is reasonable assurance of repayment.” The dubious nature of these investments highlights the concern of government intervening in private finance markets in this manner.
The truth is, modifications are needed before the bank is reauthorized. The first step Congress should take is to level the playing field for all American companies by reforming the subsidized loan terms to foreign competitors. Then Congress should urge the Administration to engage Europe in a conversation on reducing their anti-competitive aircraft subsidies.
Reckless lending played a large role leading up to America’s economic crisis and is prolonging economic recovery. Roughly $185 billion has been dumped into Fannie Mae and Freddie Mac. And now, many in Congress appear to be blindly supporting increasing Ex-Im’s funding by $40 billion over four years with no reform whatsoever despite all the evidence that it is needed.
Washington must stop tossing taxpayer-guaranteed life rafts to a select few, hurting our companies and costing Americans jobs.
Stop taking from Peter to give to Paul, level the playing field and allow the free-market to work. What Ex-Im is doing is undermining American businesses and American workers and that is just wrong.