Twelve hundred bankers, CEOs, lobbyists and other businessmen gathered at a Washington hotel this week to hear from leading politicians and corporate titans, to network, and to rally to save their federal subsidies.
At the 80th Annual Conference of the Export-Import Bank, there was broad agreement that the agency is a good thing, and that Congress should renew its charter this fall.
|"At Ex-Im, we want to be the wind in your sails."|
“I have a hard time finding what's wrong with this model,” Wells Fargo CEO John Stumpf said of Ex-Im, which guarantees loans banks like Wells Fargo make to foreign buyers of U.S. good. “How can we not be for American jobs?"
But many Republican lawmakers -- including Senate Minority Leader Mitch McConnell and House Financial Services Committee Chairman Jeb Hensarling -- opposed Ex-Im's reauthorization in 2012, and conservative groups like Heritage Action and the Club for Growth are fighting to kill the agency.
“Reauthorizing the Bank never used to be a political issue,” said Ex-Im President Fred Hochberg, ”and it shouldn’t be today. Supporting American job growth shouldn’t be controversial.”
As George Allen, the former Republican senator and governor, wrote in the Washington Examiner, “The reauthorization of the Ex-Im Bank should be a no-brainer.” Allen is co-chairing a public relations effort for the National Association of Manufacturers, a large D.C. lobby group, that is leading the fight to save Ex-Im.
These arguments mostly highlight one thing: Ex-Im benefits those companies it picks as winners.
Two bankers from Bank of America/Merrill Lynch told me during the conference that Ex-Im guarantees allow them to be more aggressive in financing exports — because the taxpayers will foot most of the bill if the deal fails.
“It’s free money,” one former JP Morgan and Citigroup banker told me, speaking of Ex-Im guarantees.
The conference also highlighted many of the small exporters that have benefitted from Ex-Im deals. Jenny Fulton of Miss Jenny’s Pickles, for instance, walked around the conference in her pickle-green polo shirt. Ex-Im has backed Jenny’s pickle exports for years, and the agency holds her up as a subsidy success story.
But when Bank of America chases an Ex-Im guarantee and gives financing to a U.S. exporter, some other businessman — who is not blessed with a government guarantee — might lose out.
Also, this dynamic likely helps the big banks and hurts the small ones. One consultant at the conference pointed out that many small businesses don’t have access to government-backed export financing because they use community banks, who don’t have standing agreements with Ex-Im. The Bank of America banker told me that often businessmen switch to B of A when they start exporting.
No wonder Ex-Im seems like such a no-brainer to the likes of Jenny’s Pickles, Boeing and Caterpillar. But the losers are the businesses that aren’t involved in exports.
Hochberg says last year his agency “supported 205,000 jobs.” But Ex-Im shifts capital around the economy, meaning it undermined some jobs while “supporting” others.
And despite all the bragging about helping small business, the overwhelming majority of Ex-Im financing benefits big business. Ex-Im’s biggest product is the long-term loan guarantee, and last year, Boeing sales pocketed two-thirds of Ex-Im’s loan-guarantee dollars.
Why are exports more important than other businesses? Ex-Im's supporters use jingoistic rhetoric to make the case. Hochberg, during his opening remarks, put up a slide of a sailboat race to demonstrate global trade. Each boat had a national flag on its sail. "At Ex-Im, we want to be the wind in your sails,” Hochberg said, cheering that the U.S. is pulling ahead of Germany in exports and catching up to China.
Hochberg said, “When I travel around the world, I see government after government looking to strengthen their economies through exports. … Everyone is putting their foot on the gas, trying to win the race for leadership in the global marketplace.”
"We're going to be left out if we don't step up our game," former Congresswoman Jane Harman said at one of the panels.
This imaginary export contest, however, doesn’t have a real prize. If Ex-Im helps us export more than China next year (and keep in mind, Ex-Im subsidizes only about 1 to 2 percent of all U.S. exports), there’s no gold medal.
The spoils of Ex-Im’s efforts go not to the nation as a whole, but to a few beneficiaries. And those beneficiaries don’t see why anyone else should complain.Timothy P. Carney, The Washington Examiner's senior political columnist, can be contacted at firstname.lastname@example.org. His column appears Sunday and Wednesday on washingtonexaminer.com.