Hugsart: Unbelievable: This government ‘bank’ has been lining corporate pockets with taxpayer funds 9-13-14
September 13, 2014 Sovereign Valley Farm, Chile
What’s the easiest way to make a 500x return on investment?
You might be inclined to say, “Buy silver” or “invest in a successful startup while it’s still a privately held company.”
But if you’re a major Fortune 500 company, you generate a 500x return on investment by buying off politicians.
A prime example of this is H.R. 4950: Protecting American Jobs and Exports Act, which aims to reauthorize the US Export-Import Bank for another seven years.
First, some background. The little-known Export Import bank in the Land of the Free (Ex-Im Bank) was created during the Great Depression by Presidential executive order under FDR.
Few people have ever even heard of this bank, let alone have a clue what it does.
Officially, Ex-Im Bank is a banking corporation organized under the laws of the District of Columbia, and its capital stock is held by the United States of America.
The bank’s primary mission is to finance trade. More specifically, it provides loans to foreigners who want to buy American products.
So if you’re a Malaysian company that wants to buy a bunch of vehicles from GM, Ex-Im Bank might just float you a loan, funded and guaranteed by the US taxpayer.
The intention was to make American goods cheaper for foreign companies to buy, thus encouraging American exports. And of course, to create jobs. Always the jobs.
(In fact, there’s a bill on the floor of Congress right now to change the name of the bank to the “Made-In-America Bank”. Ufff. Cheesy.)
But who is Ex-Im really helping? Let’s look at the numbers.
Ex-Im Bank brags that they have financed exports worth nearly $200 billion over the last five years.
That certainly sounds like a lot. But at $40 billion per year, it’s a drop in the bucket compared to the $1.57 trillion that was exported from the US last year alone.
That said, research by George Mason University’s Mercatus Center showed that an astounding 76% of Ex-Im Bank’s loan portfolio directly benefited fewer than 10 huge corporations, including familiar favorites like General Electric and Boeing.
Even the government’s own Congressional Research Service found that in FY 2010, “more than 60% of Ex-Im Bank’s loan guarantees, by dollar value, supported the sale of Boeing airplanes in foreign countries.”
In fact, last year alone, Boeing received $8.3 billion in financing for its products from the Ex-Im Bank. This translates directly into sales worth roughly 10% of the company’s 2013 revenue.
So while Ex-Im doesn’t really do jack squat for the economy, they’re really moving the needle for a handful of favored companies. Especially Boeing, the bank’s #1 beneficiary.
And Boeing’s getting a pretty fantastic deal for it. According to OpenSecrets.org, Boeing spent $15.2 million on lobbying in 2013. For the $8.3 billion they received, that’s a 54,539% return on investment. Not too shabby.
Needless to say, Boeing has a huge incentive to maintain this special relationship.
That would likely explain why just in the second quarter of 2014, Boeing spent over $4.18 million on lobbying for this bill to be passed.
You see, Ex-Im Bank’s charter is due to expire at the end of this month. And HR 4950 ensures that the bank will keep operating for seven more years.
More importantly, if this bill gets passed, Ex-Im Bank’s funds will be increased by an additional $5 billion each year for at least the next seven years. Naturally the taxpayer is on the hook for all of this.
So each penny that Boeing has spent on lobbying is looking like a smarter and smarter investment.
This is how the system works, plain and simple. It’s rigged for the benefit of politicians and corporations at the expense of the individual.
Politicians get money to finance their campaigns and keep themselves in power.
Corporate leaders get their fat bonuses for hitting the numbers.
Even the bureaucrats at Ex-Im Bank have managed to line their pockets (prompting a Congressional corruption probe into the bribery of several bank employees, and Board of Director ‘conflicts’.)