The Department of Energy has become the poster child of crony capitalism. But there is another agency operating under the radar, that’s been around since the New Deal era with a track record just as bad. And like its cousin Fannie Mae is quasi-governmental.
President Franklin D. Roosevelt started the Export/Import Bank via executive order in 1933; in 1945 Congress made it an independent agency. And like Fannie Mae, is a government sponsored entity that provides loan guarantees, direct loans, and insurance to those who couldn’t obtain one in the private sector. The purported goal is to assist foreign buyers and countries in the purchase and export of American goods.
The charter for the Export/Import Bank of the United States is subject to periodic renewal by Congress and is purportedly self-sustaining, but the House Appropriations Committee says differently:
Export and Investment Programs – The bill provides $266 million for export assistance programs, a reduction of $84 million from the request. The bill also includes $1.5 million over fiscal year 2011 for the Export-Import Bank Inspector General to provide robust oversight over the agency. The Trade and Development Agency – which promotes U.S. trade interests abroad – is level funded at $50 million, the same as last year
For a better perspective on the banks operations, I refer to Timothy P. Carney of the Washington Examiner:
Ex-Im is a posterboy for corporate welfare. Its mission is to transfer money from U.S. taxpayers, through foreign buyers, and ultimately into the pockets of American companies. While the agency touts its support for small business, a vast majority of its money goes to subsidize sales by the largest corporations in America.
The money from Ex-Im loans and loan guarantees — the agency’s biggest transactions, and the only kinds that are itemized in Ex-Im’s annual report — goes overwhelmingly to a handful of large corporations, including Halliburton, Bechtel, General Electric, Caterpillar and Westinghouse. But there’s a reason Ex-Im is known as "Boeing’s Bank."
In fiscal years 1998 through 2005, Ex-Im has issued $63.5 billion in loans and long-term guarantees. In those years, $33 billion of Ex-Im subsidies went to Boeing. That means that a majority — 52 percent — of Ex-Im’s money went to help just one company.
But that was under previous administrations. The Obama administration is now using the bank to invest in the development of natural resources in foreign countries like Brazil:
The U.S. is going to lend billions of dollars to Brazil's state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil's Tupi oil field in the Santos Basin near Rio de Janeiro. Brazil's planning minister confirmed that White House National Security Adviser James Jones met this month with Brazilian officials to talk about the loan.
The U.S. Export-Import Bank tells us it has issued a "preliminary commitment" letter to Petrobras in the amount of $2 billion and has discussed with Brazil the possibility of increasing that amount. Ex-Im Bank says it has not decided whether the money will come in the form of a direct loan or loan guarantees. Either way, this corporate foreign aid may strike some readers as odd, given that the U.S. Treasury seems desperate for cash and Petrobras is one of the largest corporations in the Americas.
It looks like the Obama administration has changed the mission statement of the Export/Import Bank of the United States. And with their track record on loan guarantees, the American people will end up eating this Brazilian “investment” too.