david duncan
Jul 22, 2017 · 3 min read

Here’s today’s view on the Export Import Bank, from the Wall Street Journal

By

The Editorial Board

July 21, 2017 7:09 p.m. ET

15 COMMENTS

In an era of polarization, taxpayers can take no solace that crony capitalism still enjoys bipartisan support. Witness the confirmation battle over President Trump’s nominee to be president of the Export-Import Bank — Scott Garrett, one of the bank’s longtime critics.

As a New Jersey Congressman, Mr. Garrett twice voted against renewing Ex-Im’s charter. To encourage exports, the bank offers loans, guarantees and other financing, but as Mr. Garrett explained, this support has become “taxpayer-funded welfare for mega-corporations.” He also noted the bank habitually “rewards those with close relations to Washington bureaucrats.” Washington’s beneficiaries weren’t pleased.

Ex-Im claims to back small businesses, but in 2014 — the last year the bank was fully operational — the two biggest recipients of financial help were Boeing ($8.4 billion) and General Electric ($2.6 billion). A year later, as Congress debated whether to let the bank’s charter expire, the two corporations spent $43 million lobbying.

Congress renewed the charter in December 2015, though the Senate Banking Committee’s last chairman, Republican Sen. Richard Shelby, blocked President Obama’s nominees to the board, denying Ex-Im the three-person quorum needed to approve any financing deal over $10 million.

Ex-Im claims to be a lender of last resort, but in 2013 one of Boeing’s top financing executives reassured customers it could find alternative funding sources even without the bank’s backing. Sure enough, Boeing’s 2017 annual outlook highlighted “healthy aircraft financing markets,” estimating export credits will supply only 10% of its $126 billion financing for global commercial airline deliveries this year.

Private financing may cost more, but at least taxpayer money isn’t then staked on cut-rate loans for risky business. Before its demise in 2011, Solyndra, the solar-panel company, snagged $10 million in Ex-Im financing. Over the Obama years Ex-Im approved $2.1 billion for renewable energy, a political favorite.

The bank’s supporters defend such risk-taking by boasting that Ex-Im investments will yield a $14 billion profit between 2015 and 2024. But the Congressional Budget Office has estimated that the bank would report a $2 billion loss if it were held to the same fair-value accounting standards as private business.

During one five-year stretch in the Obama years, 46 public employees were convicted of defrauding the bank (or, to be more accurate, American taxpayers). One bribed loan officer recommended that the bank back a company that had repeatedly defaulted on past Ex-Im guarantees, costing nearly $20 million. None of these entrenched problems are surprising, given that Ex-Im exists to dispense government privilege to some businesses and not others.

The taxpayer guarantees must be valuable because the fury against Mr. Garrett is something to behold. In a recent op-ed in these pages, Jay Timmons, president of the National Association of Manufacturers, claimed Mr. Garrett “isn’t a reformer; he’s a destroyer.” Even more overwrought, Mr. Timmons claimed Mr. Garrett’s past opposition to the bank was “tantamount to a vicious trade war against American manufacturing workers.”

Calm down, Jay. Mr. Trump has also nominated former Alabama Rep. Spencer Bachus to the Ex-Im board, and its governing structure would limit Mr. Garrett’s power. Mr. Bachus, who voted to renew Ex-Im’s charter in 2012, is seen as less hardline than Mr. Garrett, and the confirmation of either nominee would give the Ex-Im bank the quorum it needs to keep passing out large-scale cash, even with a reformer’s dissenting votes.

But at least Mr. Garrett can alert Congress and the public when Ex-Im’s dealings stink. Like any President, Mr. Trump deserves to have his nominees approved unless they are crooked or inept. It’s revealing that Mr. Garrett’s opponents fear that he’s too competent.

    david duncan

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