The Export-Import Bank of the United States is a corporate-welfare agency that puts U.S. taxpayers at risk when foreign companies, and foreign governments, buy U.S. goods on credit. Standing at this intersection of multinational business deals, banking, bureaucracy, and Big Government, it’s no surprise that Export-Import is also characterized by corruption and self-enrichment — of both the legal and illegal nature.
Foolishly, the Republican Senate is on the verge of reviving Export-Import on Wednesday.
Export-Import has been crippled for nearly four years, thanks to conservatives keeping the agency’s board vacant. Without a quorum, Export-Import can finance only the sort of small business deals that its advocates love to crow about, not the big ones that they like to play down. A shorthanded Export-Import can’t finance massive subsidies for the overseas customers of Boeing and General Electric.
On Wednesday, though, the Republican Senate is set to confirm three Export-Import board members. This would not only betray the limited government talk of conservative Republicans, but it would also abandon President Trump’s pledge to drain the swamp and end the culture whereby Washington insiders get rich off of playing with taxpayer money and the public trust.
We could talk about William Jefferson, Maureen Edu, or Johnny Gutierrez, all indicted on bribery charges that involved helping exporters and foreign companies get Export-Import financing. (Jefferson was convicted and Gutierrez pleaded guilty.) But the perfectly legal form of self-enrichment that Export-Import facilitates is just as interesting.
Tom Lopach was a Democratic fundraiser before President Barack Obama made him a senior vice president at Export-Import in 2009 and 2010. After a stint on Capitol Hill, Lopach ran the Democratic Senatorial Campaign Committee in the 2016 cycle. So he went from subsidizing big business at taxpayer risk to fundraising from big business to benefit Democrats.
Lopach cashed out to K Street, landing at a Democratic lobbying firm. His work included lobbying Congress on behalf of General Electric, on “Issues related to the confirmation of nominees to the Export-Import Bank,” according to a lobbying filing.
This week, Republicans are handing General Electric and Lopach a win.
Boeing plays a central role in the Export-Import revolving door, of course. In normal years, about 40% of all Export-Import financing subsidizes Boeing exports, hence its nickname “Boeing’s Bank.”
Kevin Varney is the chief of staff in Boeing’s Government Operations Office, which lobbies Congress to restore Export-Import and works with Export-Import to get taxpayer-backed financing to Boeing’s overseas customers. Varney spent most of the Obama administration as chief of staff and senior vice president at Export-Import. Before that, he had worked on Obama’s 2008 campaign.
So you help a guy become president, he gives you a job doling out subsidies, then you cash out to the single biggest recipient of those subsidies. This is the sort of revolving door stuff that happens every day in the swamp. Export-Import just provides a particularly well-oiled and lucrative revolving door.
But Varney didn’t go straight from Export-Import to Boeing. First, he landed at 32 Advisors, a firm which embodied the government-lobbying, fundraising big-business coziness of the Obama era. 32 Advisors was founded by Obama golf buddy and banker Robert Wolf, to monetize connections to the Obama administration.
Wolf was a member of the President’s Export Council, the chairman of which was Boeing CEO Gerry McNerney. 32 Advisors served simultaneously as an advocate, to save Export-Import from conservative efforts to reform or kill the agency, and a liaison, connecting businesses seeking subsidies to the folks at Export-Import who could make it happen. Helping companies export was the firm’s first line of business, Wolf has said.
To that end, Wolf hired not only Varney but also Export-Import’s deputy general counsel, Carter Lawson. Lawson has moved on — he is currently general counsel at Barakah, an Emirati nuclear power plant that got a $2 billion direct loan from Export-Import.
Maybe you’re already starting to notice a pattern, but there’s still more here. Varney landed at 32 Advisors only after he and two Export-Import colleagues spent months trying to create a similar export finance consultancy at Teneo, a notorious Clinton-connected firm that traded mostly on political connections. Varney and colleagues were negotiating with Teneo while they were still the top brass at Export-Import, and while Export-Import was granting a historically massive subsidy to Teneo client Dow Chemical.
All of these tales of revolving door self-enrichment are good reasons to kill Export-Import. But the best argument to kill the agency is the tale of Bob Morin, one of the guys Varney tried to bring to Teneo with him.
Morin’s job at Export-Import was to subsidize Boeing. He ran the agency’s transportation division, which mostly financed Boeing’s exports. After Export-Import lost a quorum and the ability to subsidize Boeing exports, Morin did the sensible thing: He left Export-Import for the private sector.
Morin has since helped launch the Aviation Finance Insurance Consortium, through insurance giant Marsh. The Aviation Finance Insurance Consortium brings together insurers, lenders, and all sorts of other financial firms to finance aircraft exports. In this undertaking, Morin has helped create the most robust environment for aircraft finance in American history.
This one is a happy story. It shows that when government gets out of the way, the private sector can do the things the government had been doing — only better, and without the risk to taxpayers.
All the more reason not to revive Boeing’s Bank.
