The Export-Import Bank of the United States has been having a rough few weeks and it doesn’t look like things will get any easier. In late July, the bank scrambled to halt their dealings with Russian companies, a week after the awkward news that the Obama administration had sanctioned some of the Bank’s previous Russian “customers” with close ties to Vladimir Putin.
Around the same time, the bank’s president, Fred Hochberg, was hauled before Congress to address concerns about rampant fraud at his institution after three employees were dismissed following allegations of corruption. Also called to testify was Johnny Gutierrez, himself one of the recently-dismissed bank officials. Gutierrez pled the Fifth Amendment and Hochberg’s testimony was less than illuminating. In addition, a recent report in The Daily Caller found several instances of conflicts of interest among members of the bank’s own advisory committee.
Their skepticism is well-placed. In fact, concerns about the bank’s necessity were nicely summed up by an Illinois senator back in 2008, who called Ex-Im “little more than a fund for corporate welfare.” That was Sen. Barack Obama on the campaign trail, and though, as president, he appears to have changed his tune, the “corporate welfare” charge still stands. Some 60 percent of the bank’s financing goes to only ten large corporations. Chief among the largest corporations benefitting from the taxpayer-backed Ex-Im Bank is Boeing, which earned nearly $90 billion in revenues last year, while Ex-Im contributed nearly $8 billion in taxpayer-backed financing to help sell their jets to foreign airlines. Unnecessary handouts such as this signal that “corporate welfare” is in desperate need of reform.
The most recent allegations against the bank, however, deal less with their crony-capitalistic policies than with the individuals who enact these policies. In June, it was reported that the bank had dismissed three officials and placed a fourth on leave in response to accusations of impropriety. Few details have been disclosed and only one of the employees has been named – Gutierrez, who appeared before a House Oversight and Government Reform subcommittee and refused to answer any questions. Gutierrez lost his position at the Bank after it was revealed that he took money from a Florida company which was angling for Ex-Im funding.
The hearing did yield some further interesting tidbits, all damaging to the Export-Import Bank. Hochberg, the bank’s president, stated that the accusations against Gutierrez and his three colleagues stem from three different incidents. Moreover, the subcommittee’s chairman, Rep. Jim Jordan (R-Ohio) noted that the bank’s own inspector general was looking into at least 40 potential fraud cases.
Even the makeup of the bank’s own advisory committee raises questions. The Daily Caller found that “fully half” of the committee members headed entities “that directly benefitted from Ex-Im financing during their term.” Furthermore, five additional members saw Ex-Im funding reach their organizations before joining the committee. And the questions for the advisory committee start right at the top. It’s probably not a coincidence that the current chair is former Democratic Gov. Christine Gregoire of Washington State – the home of Boeing and, according to one study, recipient of 43.6 percent of Ex-Im funding, far and away the most of any state.
The Export-Import Bank is engaging in taxpayer-funded corporate welfare, and allegations of fraud are cropping up among their staff and advisory board. This must be stopped. Reforms may be possible, but a clean break is most likely necessary.
Williams is the president of the Taxpayers Protection Alliance, a conservative advocacy organization.