The Export-Import Bank of the United States (Ex-Im Bank) is among the federal government's least-known but most obvious examples of corporate welfare.  Its populist mission – the subsidization of American exports – might appeal to a wide swath of economically unsophisticated observers, but it is nonetheless an unfair giveaway of tax dollars.

The Ex-Im bank interferes with private capital markets in three ways, each of which is ultimately bankrolled by taxpayers.  Its direct loans are straightforward: Ex-Im Bank simply allows export-oriented firms to borrow at a rate lower than they can find in the private market.  For its loan guarantees, Ex-Im Bank pledges to repay a creditors if their borrower defaults, thus securing a lower interest rate for the borrower.  Finally, through its export-credit insurance, Ex-Im  Bank provides insurance against the possibility of foreign buyer nonpayments for American-made goods, and even provides loans to foreign buyers looking to purchase American exports.

Ex-Im Bank's defenders are fond of pointing out that it generates a profit for the Treasury in many years while simultaneously (according to the bank’s mission statement) accepting “credit and country risks that the private sector is unable or unwilling to accept.”  If both of those statements are true, Ex-Im Bank is either giving loans to companies that do not need federal support, or it should be privatized, for there is no reason for the federal government to run a profitable bank.  In light of the fact that there have been years when the majority of Ex-Im Bank’s guarantees and loans have gone to Boeing, among the world’s largest and most profitable firms and decidedly not a high-risk borrower, it seems likely that the folks at Ex-Im Bank have not been wholly forthcoming about the riskiness of their loans.

For example, in 2010, Boeing reported profits of $3.31 billion.  In 2009, when profits were a measly $1.31 billion, Boeing received $8.4 of the $9.3 billion in loan guarantees issued by Ex-Im Bank.  Indeed, Ex-Im has done enough business with Boeing that it has come to be known colloquially as “Boeing’s Bank.”  This is hardly the stuff of government helping out the little guy.

As a result, it is encouraging to see Sen. Mike Lee (R-Utah) and Rep. Justin Amash (R-Mich.) working toward Ex-Im Bank's repeal.  On June 6, they introduced legislation that would "create a defined process for the phasedown of the bank."  The bill is unlikely to pass, since members of Congress (shockingly) seem to like having a friend in Washington that can loan to companies in their districts.  Regardless, it is important to keep reminding the public that Ex-Im Bank, for all its posturing as a defender of American manufacturers and exports, is nothing more than a fancy way for government to pick winners in the marketplace.  Corporate welfare should be opposed wherever it persists, and Ex-Im Bank should be no exception.