The obscure Export-Import Bank moved to center stage in Washington’s Democratic presidential caucus, as Hillary Clinton chided Bernie Sanders for opposing the bank, which plays an outsized role in this state.
The obscure U.S. Export-Import Bank moved to center stage in Washington’s Democratic presidential contest, as Hillary Clinton and her allies chided Bernie Sanders for opposing the bank, which plays an outsized role in this state.
Speaking Tuesday at the Machinists union hall in Everett, Clinton said “I just shook my head” when Sanders joined conservative Republicans in criticizing the bank as a vehicle for corporate welfare.
Whether the bank, an 82-year-old creation of the New Deal, is a corporate necessity or corporate welfare may depend on whose lens you’re viewing it through.
The bank is a self-sustaining federal agency that helps U.S. companies sell goods and services abroad by providing financing for exports, often in the form of loans and credit insurance at below-market rates. Interest on the loans finances the activities of the bank and its 400 employees.
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In Washington state, the bank reports that 162 of the 238 exporters it has helped in the last decade — from Accor Technology in East Wenatchee to Zacklift International in Cle Elum — are small businesses.
In the case of Hilliard’s Brewery in Seattle, which state officials publicized last month, the bank insured $205,000 worth of Hilliard’s beer shipments to foreign buyers on extended payment terms instead of cash-in-advance.
But the vast majority of the bank’s help to Washington companies, in terms of dollars, has gone to loan guarantees for financing foreign buyers of Boeing’s planes. Since 2007, $64 billion of the bank’s $65 billion in insured shipments, guaranteed credit or loans disbursed for Washington companies has gone to help Boeing.
Nationally in fiscal year 2013, 53 percent of the bank’s loan guarantees went to Boeing customers, fueling the “Bank of Boeing” criticism.
For facilitating such deals, the bank has been a whipping boy for the left and right.
Sanders has been a critic since at least 2002, when he knocked the bank for “huge subsidies and loans to the largest multinational corporations in the world,” which have included AT&T, Bechtel and Caterpillar.
In 2008, presidential candidate Barack Obama called the bank “little more than a fund for corporate welfare,” a familiar criticism from the left for providing aid to Enron and one of the world’s largest coal plants in South Africa.
But it was tea-party conservatives, seeking smaller government and free markets, who blasted the bank’s “crony capitalism” and turned it into a cause celebre.
Conservatives in Congress refused to take up the bank’s reauthorization last year, forcing it into a five-month hiatus. Bipartisan majorities in the House and Senate rescued the bank by attaching its reauthorization to a popular highway spending bill, reviving it until 2019, when conservatives have promised another fight.
Advocates and lobbyists have argued that U.S. manufacturers, disadvantaged by a stronger dollar and foreign export-credit agencies that are more generous than the Export-Import Bank, risk losing business and jobs to overseas competitors without the bank’s help.
Perception of the bank has changed for some over the years.
Once in the White House, Obama became a supporter of the bank’s reauthorization in 2012 and 2015, mostly using the recession as his rationale.
House Majority Leader Kevin McCarthy, R-Calif., had been a supporter but became an opponent as conservative groups such as the Club for Growth and Heritage Action for America targeted the bank.
When the bank’s reauthorization was held up last year, House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, said of the bank’s loans: “If private creditors are unwilling to engage in these transactions, it begs the question, why should the American taxpayer?”
Supporters say the bank exposes taxpayers to little risk.
Its loans and guarantees are backed by collateral goods, and the bank reported its default rate was just 0.24 percent in fiscal year 2015, when it supported 109,000 American jobs.
None of the three remaining Republican presidential candidates has declared support for the bank.