Abound Solar, the solar panel manufacturing company famous for going bankrupt last year after receiving millions of dollars in taxpayer-backed loans, is making headlines again: according to recent media reports, the price tag on the clean up of the company's "unknown hazardous waste" is as high as $3.7 million.
Unfortunately, much of this drama could have been averted if the U.S. government had not propped up the firm in the first place.
Abound Solar’s business was in-large part supported by help from government entities such as the Export-Import Bank (Ex-Im Bank), which help facilitate the purchasing of its product through a loan of $9.2 million to an Indian company. At the time of the loan, Abound Solar had questionable financial health, meaning most banks would have obviated from providing any financial backing involving such a company. Yet, the Ex-Im Bank decided in its infinite wisdom that it should step-in and do what most other financial institutions would not do and provide assistance to Abound Solar by providing a risky loan to another company directly engaged in business with the solar company.
While there are certainly more pressing issues at hand, like the debt ceiling and another budget showdown, Congress must address the future of the Ex-Im Bank. And unlike the debt ceiling and potential shutdown, there is a reasonable amount of room for both sides to come together concerning the Bank, considering Republicans have consistently opposed it, Democrats have recently begun to express reservations about its actions and President Obama himself once called it “little more than a fund for corporate welfare.”
The fact that the Ex-Im Bank was willing to get involved with companies such as these should raise alarms, but the fact that the federal agency has a record rife with similar mistakes is what should push Americans to call on our elected officials to wind-down this corporate welfare program. The Export-Import Bank is a federal government agency that is authorized by Congress and the loans are backed by the American taxpayer. One might think that such an agency would be somewhat risk-adverse considering that the Bank is operating on behalf of the American public, but when it comes to investing in questionable energy companies the Ex-Im Bank has a lengthy rap sheet that includes providing financial backing to companies such as Enron and Solyndra.
The Bank has been often been referred to as a reverse Robin Hood, distributing wealth to large companies that use their influence and lobbyists to secure favorable financial packages. This practice is not only unfair, but it is also a danger to our free market economy. The Bank effectively gives the U.S. government the power to intrude into free markets and unilaterally provide companies with monetary advantages over their competitors. This aids bad companies, such as Enron, and Solyndra, and often has damaging unintended consequences on healthy American employers.
Take, for example, Boeing, which receives the lion’s share of Ex-Im’s loans. This successful American company has been the benefactor of much of Ex-Im’s largesse, sometimes receiving more than $12 billion a year. And while this is fantastic for Boeing and its shareholders, these loans wreak havoc on the entire American airline industry and its workers.
Due to its charter, the Export-Import Bank has traditionally only financed deals that allow foreign companies to purchase goods from American manufacturers, in an effort to promote trade with entities outside the United States. This has excluded American carriers from receiving the same low-interest loans and favorable terms that are often given to their foreign competitors by the Ex-Im Bank. This puts the entire American airline industry at a relative disadvantage, and over the long-term, foreign airlines save millions, while American carriers are left in the dark. This disadvantage has caused the American airline industry to reportedly lose as many as 7,500 jobs and hundreds of millions of dollars in potential revenue.
Given that Ex-Im is having a disastrous impact on American economic growth, in addition to a track record of assisting failed companies such as Abound Solar, Congress should scrap its charter altogether.
There aren’t many issues that Democrats and Republicans agree on, so let’s move forward with the one that they do agree on, shutting down the Ex-Im Bank.