The Ex-Im Bank should concern itself with financing only when the absence of it exists. Yet, the Bank is engaged in areas where an existing presence of creditors and private lenders can provide support. This has been most pronounced in the airline industry, an area where the Ex-Im Bank’s role has been particularly detrimental. By granting foreign entities ongoing financial support, the Bank has effectively gifted foreign companies a comparative advantage in the international market. As a result, domestic airlines are penalized for simply trying to play by the rules. Conservative estimates show that the Ex-Im Bank costs the U.S. airline industry up to 7,500 jobs and $684 million per year. For this reason, the Ex-Im Bank recently came under fire from certain Members of Congress. During last spring’s Congressional hearing over the Bank’s re-authorization, several Congressmen raised doubts about the ongoing efficacy of the Ex-Im Bank’s current model. Noting that the institution lacked both transparency and oversight, these congressmen inserted language into the Ex-Im’s reauthorization bill that would limit the damage that could be done by the institution. Moreover, the new reauthorization legislation included explicit instructions for the Treasury Secretary to begin winding down the Ex-Im Bank and its role in manipulating marketplaces. So far, those in charge of the Bank, including the Treasury Secretary, have done little to see these new instructions through.
And so, public money continues to flow to companies like Boeing despite the company’s revenue stream of close to $70 billion in 2011. But as the company’s recent blunder with the 787 has reminded us, no business is guaranteed to perform well ad infinitum. After all, one can’t forget the story of Fannie Mae and Freddie Mac: two giant mortgage lenders backed by American taxpayers that are deeply in the red and costing Americans hundreds of billions of dollars. As it was with Fannie and Freddie, when profits started drying up, taxpayer funds kept flowing. Eventually, when bankruptcy was imminent, it finally became clear that those funds weren’t going to be paid back anytime soon. To this day, Fannie and Freddie remain a large black spot on the U.S. Treasury’s balance sheet. Our country cannot afford another failed experiment in risking American taxpayer’s money.
The Ex-Im Bank is an institution that risks billions in taxpayer-backed loans to companies chosen through a politically-driven process. Congress should take note of the recent fiasco surrounding Boeing 787 Dreamliners and finally force the Obama Administration to wind down the Ex-Im Bank while we still can. If not, the Bank will become another institution that is too big to fail and further threaten American taxpayers with costly governmental failures.
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