The Unneeded War Over the Export-Import (Ex-Im) Bank

The Unneeded War Over the Export-Import (Ex-Im) Bank

09/03/14

Stan Veuger

Economics, Politics, United States

The Export-Import Bank plays a useful role in sustaining a truly global marketplace in which firms compete based on productivity and service, without being subject to the frills of fussy governments. It deserves to be reauthorized.

The Export-Import Bank is under attack, more so than ever since its founding in 1934. The federal agency, responsible for providing export financing to American businesses, has quite suddenly become a lightning rod for some conservatives and libertarians. These critics of the bank see it as a “Petri dish of corruption and graft” and the “very definition of corporate welfare.” They believe that it should be “put out of its misery” to “level the playing field.”

Where these emotions come from is quite clear. When the 2008 financial crisis brought the U.S. financial system to the brink of collapse, the Bush administration designed the Troubled Asset Relief Program (TARP) to purchase distressed assets and provide liquidity to struggling financial institutions. The bill authorizing this program initially failed to pass the House of Representatives, but a fiercely negative market response led to its eventual passage, and some of the key players at the heart of the subprime mortgage crisis were bailed out with taxpayer money. This was an unfortunate necessity, and it did not sit well with large swaths of the voting population. A backlash against crony capitalism ensued, and opposition to bailouts grew to be widespread.

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