I urge our elected federal representatives to oppose the reauthorization of the Export-Import Bank. (The Ex-Im Bank provides taxpayer guarantees to U.S. companies that export and sell products to international customers. Authorization is set to expire on 9/30.) This has been and continues to be a quintessential example of crony capitalism. If a U.S. exporter has customers who find it difficult to find financing, the seller can always guarantee a loan and get a security position to get the asset back in a worst case. If they still cannot get financing, the seller could provide direct financing. In any case, our government should not guarantee such loan private companies.
I’m sure that small and large Iowa export companies are heavily lobbying for reauthorize the Bank. I hope our representatives resist the pressure and vote against this bad policy where taxpayers are asked to take the risk and private companies reap the profits.
In the Register today, 1/30/2015, Daryl Bouwkamp, with the Vermeer Corp., advocated that the Export-Import Bank (Ex-Im Bank) be reauthorized by Congress to help exporters, such as Vermeer Corp. He wrote, “Vermeer currently serves customers in more than 60 nations – some of whom could we could not reach without financing support from the Ex-Im Bank.” I don’t understand why couldn’t Vermeer provide the financing or the guarantees needed? Are there no banks that would loan money to Vermeer or its customers if Vermeer guaranteed that the loans will be paid back? If not, why should taxpayers be on the hook?
This is a chance for Republicans to show whether or not they really mean what they say when they talk about ending crony capitalism. It appears that the exporters and bankers that use the Ex-Im Bank have become dependent on the taxpayer guarantees. We need to get back to true free market capitalism, where both the risks as well as the rewards are are kept in the private sector. If Republicans allow the Ex-Im Bank to be reauthorized, it will send a clear signal that crony capitalism is alive and well in America.
The essay in The Register on 9/15/2014, by Mary Andringa and Jay Timmons in support of reauthorizing the Export-Import Bank (Ex-Im Bank) was well done. The fact that the Ex-Im Bank returned $1 billion in profits to the U.S. Treasury is very persuasive. Of course the same thing could be said about the U.S. government getting into about any business. If our government ran a grocery store or a tractor manufacturing plant, it is very likely that it could make a profit. But we don’t (or shouldn’t) do things that way in the United States.
In this case, there is good reason to believe that privately owned banks could provide this kind of financing for our manufacturers who want to export their products to other parts of the world. The manufacturers should be willing to guarantee the debt of their customers if that is what is needed to secure financing for their buyers. The fact that Ex-Im Bank financing, “is available to any exporter of any size” does not mean that this isn’t an example of crony capitalism. In this case, the crony capitalists just happen to be a very large group of manufacturers who want the government to guarantee loans for their foreign customers.
We have created a crutch for these businesses. We need to take away that crutch and move towards free market capitalism.
Link to Register article: http://www.desmoinesregister.com/story/opinion/columnists/iowa-view/2014/09/15/iowa-view-export-import-bank-economic-engine/15650761/