As Congress considers whether to reauthorize the Export-Import Bank later this year, lawmakers should take a look at how much taxpayers would be on the hook if, as U.S.–Russia tensions rise, Russian companies that benefited from Ex-Im loans defaulted on their obligations. Over at Heritage Action, Dan Holler has the number:
Even as Americans sour on Russia their financial activity in the country has soared through a little known credit export agency called the U.S. Export-Import (ExIm) Bank. According to the Bank’s 2013 annual report, it guaranteed more than $580 million in export funding during the last fiscal year — up 177-percent from fiscal year 2012.
As is typical with the ExIm Bank, the bulk of fiscal year 2013 activity centers around Boeing — 85-percent of the Russian guarantees, to be precise. As we’ve written before, even though Boeing can arrange its own financing, the $93 billion company “receives upwards of 80-percent of the Ex-Im Bank’s taxpayer-backed loan guarantees.”
There are many more reasons to end the Ex-Im bank than just its misguided subsidies of companies in Russia and in other questionable countries. Why?
It’s an unjustifiable subsidy to big manufacturers like Boeing at the expenses of other companies and U.S. taxpayers. It’s corporate welfare that distorts the level playing field for all the companies that do not get help from the Bank to finance their customers’ purchases. It is certainly unfair to U.S. airlines, like Delta, who have to buy their planes from Boeing without help from the government but compete with foreign companies, such as Air China, whose planes were subsidized. It also exposes taxpayers to a financial burden when, for instance, companies like Solyndra go bust after the Bank has guaranteed loans to their foreign customers.
Imagine for a moment what taxpayer’s exposure would be if Boeing went bust. And yet lawmakers’ love for corporate welfare is such that the Bank’s financing authorization — and as a result our exposure as taxpayers — is growing dangerously.
As I have explained in the past, the Ex-Im Bank manages to be both pointless and ineffective. Even young senator Barack Obama denounced the program in 2008 as “little more than a fund for corporate welfare.” He was right.
On that front, Holler has more on the Bank’s involvement in Russia. He writes:
Last July, an exclusive Reuters report provided an intimate look at how foreign businesses go about trying to secure financing from the U.S. Export-Import Bank:
Billionaire Russian businessman Gennady Timchenko, a long-time associate of Russian President Vladimir Putin, plans to seek U.S. government-backed funding to buy luxury aircraft, Reuters has learned.
To smooth the path for financial backing from the U.S. Export-Import Bank and allay possible U.S. government concerns about him, Timchenko hired lobbyists from powerhouse Washington law firm Patton Boggs, according to emails and documents viewed by Reuters. . . .
Timchenko is one of Russia’s richest oligarchs, the billionaire business barons who emerged following the fall of the Soviet Union, some of whom enjoy close ties to Putin. The plane order would bolster the fleet of Timchenko’s Finland-based luxury jet charterer, Airfix Aviation Oy, whose aircraft have reportedly transported Kremlin-linked businessmen and Russian government officials.
Patton Boggs acknowledged its work on Timchenko’s behalf. It told Reuters it has held preliminary talks with Ex-Im Bank, officials from two Senate offices and a U.S. congressional policy advisor, without naming the officials. The firm said the talks with Ex-Im Bank involved a loan guarantee for a single jet that Airfix has already ordered.
While it appears the effort fizzled out (there is no mention of Airfix Aviation Oy on the Bank’s website), big dollars were thrown at the effort:
Timchenko hired Patton Boggs through Ivanyan & Partners, a law firm in Moscow that represents the billionaire, said [Patton Boggs partner Joseph] Brand in an email. Ivanyan & Partners paid Patton Boggs $50,000 last quarter for lobbying in the U.S. Senate, according to a July 21 record submitted to Congress.
The Russian oligarch shelled out another $60,000 in the third quarter, according tolobbying disclosure reports. Fourth quarter lobbying dropped to a mere $10,000.
The bottom line is that there are plenty of good reasons to get rid of the Bank. Maybe its involvement in Russia’s finances will help illustrate these reasons better than the people who have been making that case for years.