The Truth About Who Really Benefits From the Ex-Im Bank?

Veronique de Rugy tells it straight:

Defenders of the US Export-Import Bank (Ex-Im Bank) cite its working capital programs as evidence that the agency plays a critical role in supporting small businesses. As one of four main components of Ex-Im’s export subsidies, the working capital programs represent a relatively small component of the agency’s overall portfolio. The agency as a whole mainly benefits large, politically connected firms, as I have previously demonstrated.

Even though small businesses are the main beneficiaries of the Ex-Im Bank’s working capital programs, big businesses still remain big recipients indirectly and directly. The working capital program transfers the risk of lending from the lenders (often big banks or sometimes Boeing itself) to taxpayers....

The vast majority are guarantees in which the agency reimburses lenders up to 90 percent of the outstanding loan amount in the event of nonpayment. This shifts the risk from lenders—typically massive global financial institutions like PNC Bank, JPMorgan Chase, and Wells Fargo—to the taxpayers.

The...chart shows the top ten beneficiaries of the Ex-Im Bank’s working capital programs from FY 2007 to FY 2014.

The clear winners are large corporations like Ford, Caterpillar, and Boeing. The same names of large politically connected corporations that have shown up in our top ten Ex-Im beneficiaries of 2013 and 2007 appear in this context as well.

The good news is that this textbook example of cronyism is presently shuttered because Congress failed to reauthorize the Ex-Im Bank by July 1. The bad news is that the big corporate interests who have enjoyed its largesse over the years are committed to bringing the agency back to life. Despite the rhetoric of benefits to small businesses, policymakers would do well to remember the truth: the Ex-Im Bank’s benefits have flown primarily to large politically connected businesses.