Subcommittees Examine the Export-Import Bank’s Mandates
April 30, 2015 -
The Financial Services Subcommittee on Monetary Policy and Trade and the Oversight and Government Reform Subcommittee on Health Care, Benefits and Administrative Rules held the second in a series of hearings on Thursday on the Export-Import Bank. At Thursday’s hearing, the subcommittees examined the Export-Import Bank’s mandates.
“The Export-Import Bank’s stated goal is to support American jobs through exports. However in my opinion, judging by the Bank’s prior financing deals, it appears to be doing quite the opposite, oftentimes," said Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI). "American taxpayers have been unwittingly propping up foreign state-owned companies in Saudi Arabia, Russia, China, Venezuela, Pakistan, India, Colombia, Mexico, Ethiopia, South Africa and others who have done nothing but, frankly, work against the best interests of American citizens.”
Key Takeaways From the Hearing:
- Ex-Im’s mandates create incentives for the Bank’s staff to churn out approvals – independent of an applicant’s merits – just to conform to a mandate. This invites the type of waste, fraud and abuse that has become emblematic of Ex-Im.
- At our last joint hearing on Ex-Im, the subcommittees learned from Ex-Im’s acting Inspector General that there are at least 31 open fraud investigations involving Ex-Im and the possibility of indictments in the future.
- Just last week, former Ex-Im employee Johnny Gutierrez admitted that on 19 separate occasions, he accepted bribes in return for recommending the approval of unqualified loan applications and improperly expediting others.
- Ex-Im employees say that ethical conduct is not among Ex-Im’s strengths. Responding to a 2013 government survey, only 42 percent of Ex-Im employees agreed with the statement: “My organization’s leaders maintain high standards of honesty and integrity.” Only half agreed they can disclose a suspected violation of any law, rule or regulation without fear of reprisal.
- Politically-driven mandates that have no economic rationale distort the Bank’s fiscal decisions and increase the likelihood of default, which puts taxpayers at greater risk. The Congressional Budget Office (CBO) reported that if the Ex-Im Bank used more accurate accounting methods, the Bank would cost taxpayers $2 billion over 10 years.
“Since you have taken the helm of Ex-Im, 65 matters have been referred to prosecution, 31 arrest warrants, 85 indictments, 48 criminal judgments, decades of combined prison time, a quarter of billion in fines, restitution and forfeiture,” said Chairman Jeb Hensarling (R-TX).