- My Work Here is Finished - November 15, 2016
- America Needs to Use More Energy, Not Less - November 7, 2016
- Haiti Needs Electricity. Hillary Gives Them a Sweatshop, Foundation Gets a New Donor - October 31, 2016
The Ex-Im Bank has become a key talking point in the 2016 presidential campaign, but most people don’t even know what it is or why it exists. They surely don’t know that it is a New-Deal era government program that takes our tax dollars and gives them to big businesses—like Boeing, ExxonMobil, and General Electric—to make it easier to sell their products overseas.
This little-known entity is making news because it is about to go away—but Democrat presidential candidate Hillary Clinton and Senator Lindsey Graham (R-SC) don’t want it to, while most Republican presidential candidates do.
Ex-Im, or the Export Import Bank, was created by Executive Order in 1934 by Franklin D. Roosevelt to make loans to the Soviet Union and aid trade with Cuba. With the Export-Import Bank Act of 1945, Congress made Ex-Im an independent agency and required that Ex-Im be reauthorized every 4-5 years. Ex-Im’s current authorization expires on June 30.
Ex-Im has historically enjoyed bipartisan support, however the need to cut spending—coupled with watchdog reporting—brings reauthorization into question. Under the Obama Administration, Ex-Im lending has increased 248 percent. Taxpayers now hold nearly $140 billion in Ex-Im exposure.
The Ex-Im website states: “EXIM Bank is more critical than ever to small businesses.” A few weeks ago, while at the Smuttynose Brewery campaign stop in New Hampshire, Hillary Clinton bragged that she wants to be “the small business president.” Pushing for Ex-Im reauthorization, she said: “The idea that we would remove this relatively small but vital source of funding for businesses to compete is absolutely backwards.” “Embarrassing” is how she described Republican candidates who oppose reauthorization.
While Clinton wanted her small audience at Smuttynose to believe that Ex-Im is, as the website says, critical to small business, a recent report from American Transparency (AT), validates “corporate welfare” claims. The Federal Transfer Report – Export- Import Bank analyzed the $172 billion in Ex-Im loans, guarantees, and activity since 2007.
The AT report, released on May 30, found that while 90 percent of Ex-Im loans do go to small businesses, 85 percent of the money goes to big business—10 percent of the transactions get 85 percent of the money.
Boeing is Ex-Im’s number one customer.
Addressing Ex-Im, Clinton, and the AT report, the Washington Examiner says: “As secretary of state, she admittedly gave a ‘shameless pitch’ in 2009 for Boeing aircraft to the Russian Airline Rosavia, encouraging them to apply for financing from Ex-Im. Seven months later, in June 2010, Russia purchased 50 Boeing 737s. Two months after that, Boeing made its first-ever donation to the Clinton Foundation in the sum of $900,000. Since 2010, Boeing has contributed $1.1 million to the foundation. General Electric, the second largest beneficiary of bank assistance, is also a Clinton Foundation donor.” It continues: “Also unsurprisingly, Ex-Im Chairman Fred Hochberg himself is no stranger to ‘Clinton World.’ He’s listed in the foundation’s $10,001-$25,000 donor range and previously served as a campaign bundler for Hillary’s failed 2008 presidential campaign.”
Obviously, there is no shortage of crony corruption at Ex-Im.
Recipients of Ex-Im support in the energy space are both large and small; successful corporations and dismal failures.
The addendum highlights the $3 billion green energy companies received from Ex-Im. There are more than $140 million worth of failures within the financial transaction portfolio—though “additional time, resources and further research would turn up much more.” It states: “We consider this addendum a limited subset of a much larger whole.”
As expected, Solyndra is on the list. Just six months before its infamous bankruptcy, Ex-Im, in February 2011, approved $10.3 million in long-term credit to Solyndra’s exports to Belgium.
I frequently address the Spanish solar company Abengoa—which is under investigation for a variety of violations. It has an interesting connection to Ex-Im: Former New Mexico governor Bill Richardson is an advisory board member to Ex-Im and sits on Abengoa’s advisory board. The addendum states: “Abengoa has obligations of over $225 million in Ex-Im support.”
Other examples include Amonix, Evergreen Solar, Abound Solar, SolFocus, Calisolar/Silicor Materials and Willard & Kelsey Solar Group—all received Ex-Im support and failed.
But, our taxpayer dollars didn’t just go to failing green-energy projects, they also went to foreign companies. In addition to Spain-based Abengoa, Germany-based Siemens Energy has been the recipient of $709.53 million in Ex-Im financing. France-based Areva Solar North America received nearly $54 million in Ex-Im support. Switzerland-based ABB: $89.22 million. China’s troubled Hanergy owns MiaSole, which received $9 million in “working capital” funding from Ex-Im.
Remember, the small business support touted on the Ex-Im website and by Clinton? The AT addendum points out that Ex-Im chose Siemens Energy—one of the largest and most influential companies in Europe—as its “2015 Renewable exporter of the year” and “2015 Renewable deal of the year.” The awards were given out at its lavish annual conference.
Speaking of big business, GE, the addendum states, “has been able to create billions of dollars in corporate assets through utilization of cheap Ex-Im financing.” One example is long-term loans for three solar photovoltaic power projects in Canada.
Green-energy companies are not the only ones in the energy sector to take advantage of the low-cost, taxpayer-funded financing. Multinational oil company Exxon Mobil and oil industry service companies Halliburton and Schlumberger also received billions.
It is tough to chastise these companies for making wise business decisions in finding low-cost funding—but we can criticize Congress for allowing our taxpayer dollars to be given to them.
Clinton’s claim that failure to reauthorize Ex-Im would “threaten the livelihood of those 164,000 jobs” is laughable. Siemens, GE, ExxonMobil, Halliburton and Schlumberger—just to mention some of the big businesses in the energy sector—should all be able to self-fund or seek private financing. The Washington Examiner points out: “Only 2 percent of all U.S. exports are actually financed by the bank.”
Adam Andrzejewski, Chairman of American Transparency and the author of the AT report, calls Ex-Im a “political bank”—while Politico calls it a “political football.” In a piece titled “Ex-Im Bank expiration ‘inevitable’ amid the 2016 GOP fight,” Politico states: “The Export Import Bank is almost certain to close its doors for the first time in history,” but, it points out, “supporters are sure to try to revive the bank later this summer.”
Addressing Ex-Im’s future, Andrzejewski says: “The fate of the bank is an important test that will show whether Congress is on the side of taxpayers, and basic market principles, or special interests that are capable of bending markets in their direction.”
Ex-Im is one case where a “do-nothing Congress” is a good thing. If they do nothing, Ex-Im’s authorization expires on June 30 and we, the taxpayers, will no longer be responsible for funding this corporate welfare.