Just as the Internet grants eternal life to bad humor, the federal government bestows eternity on bad ideas.
The Export–Import Bank is one of those federal agencies that have long outlived the world into which it was born.
Now bereft of any meaningful existence, the Export–Import Bank lurches from extension–to–extension, appropriation-to-appropriation, spending taxpayer’s money on unnecessary market meddling.
FDR established the Export-Import Bank in 1934 to support trade with the Soviet Union, a bad enough idea right there.
Now the Soviets have vanished into the dustbin of history, but the Export-Import Bank soldiers on with a new mission: loaning tax–supported dollars to U.S. companies favored by political insiders.
Giving an advantage to the favored few so they can compete with other U.S. companies that don’t have a first class lobby team.
Many of the loans are risky endeavors that commercial banks won’t touch and are made to dubious borrowers with colorful backgrounds. At other times the loans are made in markets where participation by the Export–Import Bank encourages risky speculation where financial decisions aren’t make on underlying value, but are instead made on turning a quick buck.
Taxpayers are supposed to profit from the interest. Although borrowing money from the Chinese so you can loan it to someone else doesn’t make sense. As financial transactions go it closely resembles asking a loan shark to finance your trip to the horse races.
Should the loan go sour, taxpayers are on the hook for the complete loss.
If that reminds you of the Fannie Mae, Freddie Mac, and the mortgage loan crisis — it should.
Authorization for the Export-Import Bank expires September 30th, thanks to an extension negotiated by Eric Cantor.
Export-Import Bank potentates now want reauthorization for five years and a 40 percent boost in the credit line to $140 billion.
The supporters of this bank should be enough to persuade any conservative to vote no.
Rep. Maxine Waters D-Calif. is joined by Haley Barbour, the US Chamber of Commerce, and General Electric which paid 7.4 percent in taxes on a profit of $5 billion in 2010, a lower rate than both Warren Buffett and his secretary.
The Club for Growth has done an analysis of the 10 largest clients of the Export-Import Bank. It’s what you would expect when the cookie jar is in the hands of unelected bureaucrats who know nothing about business but everything about politics.
The top five are:
2. Mexican drug cartels
3. Oil company with ties to Russian mafia
5. Air India
The Mexican drug cartel loans are particularly interesting.
WFAA–TV in Dallas discovered small business loans by the Export-Import Bank “wasted taxpayers money on top of using the funds to support criminal activity.”
A total of $243 million in bad loans were made and the money linked to the Juarez and Sinaloa drug cartels. The investigation “found dozens of loans made to companies with nonexistent identities and addresses.”
Of the $243 million loaned out a grand total of $25 million has been repaid. In government work losing 90 percent of your money is considered so successful the Bank wants to open an office in Dallas–Fort Worth.
But loans that didn’t go to drug entrepreneurs are equally infuriating.
Everyone knows Hollywood stopped making movies because producers couldn’t obtain subsidized government loans. So the bank rode to the rescue. It provided backing for "The United States of Leland" a film that grossed a total of $343,816.00. It also financed "Lost Treasure," "Global Effect" and "High Voltage", films that were so good that, as Cosmo Kramer says, “They went straight to video.”
How can consistent stupidity like this happen? Easy.
With the government there is no market feedback. A commercial bank that made these loans, if it survived, would fire the employees who made the bad decisions.
But in the federal government the metrics are different. It’s not how much you lost or how much you made. It’s how much you loaned and how many new programs you started and did you spend the entire budget before the close of the fiscal year?
The Export–Import Bank is a political piggy bank that rewards lobbyists, politicians and crony capitalists at our expense. All too often Republicans confuse support for business with not allowing any business to fail. This is like saying you support democracy, but no incumbent should ever lose. Wait, they already believe that.
On September 10, 1833 President Andrew Jackson shut down the first bank of crony capitalism, the Second Bank of the United States.
This September, 181 years later, it is time to shut down that modern bank of crony capitalism: The Export–Import Bank.
Michael R. Shannon is a commentator, researcher (for the League of American Voters), and an award-winning political and advertising consultant with nationwide and international experience. He is author of "Conservative Christian’s Guidebook for Living in Secular Times (Now with added humor!)." Read more of Michael Shannon's reports — Go Here Now.
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