The Export-Import Bank of the United States (Ex-Im) is a little-known institution that has become a hot topic in Washington as Congress debates whether to extend its authorization and increase its lending capability.
The bank is also a hotbed of crony capitalism—run by political donors for the benefit of political donors.
The bank’s board of directors—appointed by the president and approved by the Senate—is stocked with large political donors and campaign bundlers.
Ex-Im Bank chairman and president Fred P. Hochberg, for example, has personally given more than $100,000 to Democratic candidates and committees since 2007, including almost $10,000 to President Obama.
That is on top of the money he bundled for the Obama campaign in 2008—between $100,000 and $200,000.
Vice chair Wanda Felton has given more than $9,000 to Democrats since 2007, nearly all of which went to the Obama campaign.
They are joined by ex officio members Ron Kirk, the president’s trade representative, and John Bryson, who Obama recently appointed Secretary of Commerce.
Kirk bundled between $50,000 and $100,000 for Obama in 2008, and personally contributed more than $7,000 to the president’s campaign.
Bryson, meanwhile, has given approximately $11,000 to Democratic candidates since 2007.
Ex-Im cronyism is not exclusive to Democrats. For instance, board member Larry Walther has given $15,000 to Republican candidates and committees since 2007.
Critics claim this sort of political favoritism is the inevitable consequence of a government body using taxpayer dollars to subsidize certain companies at the expense of others.
Created in 1934, Ex-Im essentially subsidizes—through loans and other credit mechanisms—the foreign purchase of U.S. products that may not be able to attract private financing.
Recipients include a host of politically connected green-energy companies—by law, 10 percent of Ex-Im financing must support renewable energy—and large corporations such as General Electric and Boeing. The Chicago-based airline manufacturer, which is ranked 36th on the 2011 Fortune 500 list, received more than 40 percent of total Ex-Im financing in fiscal year 2010.
President Obama has called on Congress to extend the Ex-Im’s authorization, which expires at the end of May. But the president has not always been so fond of the organization. As a candidate for president in 2008, he said the Ex-Im bank had become "little more than a fund for corporate welfare."
Contradicting that position once in office, the president publicly endorsed reauthorization during a Feb. 17, 2012, speech at a Boeing production facility in Washington State.
"The Export-Import Bank helps companies like this one sell its products," he said.
The company’s connections to the Obama administration help explain the aid to Boeing. CEO Jim McNerney, for example, chairs the president’s Export Council. Former White House chief of staff Bill Daley served on Boeing’s board of directors before joining the administration.
Boeing executives and employees gave more than a hundred thousand dollars to Obama’s campaign in 2008, making him a top recipient of the company’s cash.
Opponents question why companies like Boeing even need Ex-Im assistance at all. One House Republican aide pointed out that the company has its own financing arm—Boeing Capital—explicitly designed to help foreign companies buy their products.
"They know what they’re doing," the aide told the Washington Free Beacon. "They have their own unit dedicated to this sort of financing, they just use Ex-Im because it’s more profitable."
The Ex-Im bank has helped fund a number of controversial enterprises with financial connections to the administration.
In February 2011, the Ex-Im bank approved a $10 million loan guarantee to Solyndra in an effort to help the struggling firm stay afloat by selling solar panels to a customer in Belgium.
The company, which was backed by Oklahoma billionaire and major Obama-bundler George Kaiser, filed for bankruptcy seven months later.
Ex-Im awarded loan guarantees worth $456 million to First Solar, which allowed the company to essentially purchase solar panels from itself through a subsidiary in Canada.
Major investors in First Solar include Obama-backer Ted Turner and investment banking giant Goldman Sachs, one of the president’s largest corporate contributors in 2008.
Another struggling solar firm, Abound Solar, received $9.2 million Ex-Im loan in July 2011. That was on top of a $400 million loan guarantee the Department of Energy gave the company just months earlier, despite a "junk credit" rating from the major ratings firm Fitch.
One of Abound’s earliest and largest investors was billionaire heiress Pat Stryker, who has given nearly half a million dollars to Democratic campaign and committees since 2007, including approximately $10,000 to Obama.
Earlier this year, the company announced it was laying off 180 of its 400 workers due to financial difficulties.
The Ex-Im bank has come under fire from both sides of the political spectrum—from Tea Party conservatives like Sen. Jim DeMint (R., S.C.) to self-described socialist Sen. Bernie Sanders (I., Vt.).
Both have vowed to oppose a Senate bill that extend the bank’s authority through 2015 and increase its current lending cap by 40 percent to $140 billion.
Published under: Abound Solar , Boeing , Cronyism , Ex-Im Bank , Federal Bureaucracy , First Solar , Solyndra