Its mission, “to assist in financing the export of U.S. goods and services to international markets,” is so innocuous: promoting exports — who could be against that?
If you dig deeper, though, you realize that not only is the bank pouring money into large crony businesses — Boeing and Caterpillar, for example — the risks involved are high and growing.
The Mercatus Center’s Veronique de Rugy has charted the total risk exposure of the bank. Were these loans to default, in excess of US$100 billion in taxpayer funds would be needed to cover the losses.
Needless to say, imposing the risk of business loans on taxpayers is a bad idea. If these loans made sense, private banks would lend the money.
To make matters worse, the bank inevitably finances exports to foreign competitors of domestic firms. As recently as 2012, domestic airlines were suing the Ex-Im Bank for subsidizing exports of Boeing aircraft to an Indian airline.
Moreover, as Sallie James of the Cato Institute noted in her 2012 study on the bank, it doesn’t even achieve its goal of improving the nation’s trade balance — all while creating unnecessary risks and wasting money.
The effects of the Ex-Im Bank simply amount to a redistribution of risk and money from taxpayers to the well-connected companies that make use of the bank. Simply put, the bank should be terminated, and all outstanding loans wound down.
Given how often legislators are supposedly looking for low-hanging fruit to cut from the government, it’s shocking that such obvious waste has persisted as long as it has.