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Cato Institute on Free Trade

 

 


Ex-im bank replaces market risk with bureaucrats' decisions

Washington has been embroiled in whether to reauthorize the charter of the Export-Import Bank, a government-run export credit agency which provides access to favorable financing for some US companies. Reauthorization buffs contend that Ex-Im fills a void left by private sector lenders unwilling to provide financing for certain transactions. Ex-Im's critics [say that] by effectively superseding risk-based decision-making with the choices of a handful of bureaucrats pursuing political objectives, Ex-Im risks taxpayer dollars.

It turns out that for nearly every Ex-Im financing authorization that might advance the fortunes of a single US company, there is at least one US industry--and often dozens or scores of industries--whose firms are put at a competitive disadvantage because supply is being diverted, market power is being shifted, and the cost of capital is being lowered for their foreign competition. These are the unseen consequences--the collateral damage--of Ex-Im's mission.

Source: Cato Institute 2015-16 voting recommendation on Ex-Im Bank , Jul 31, 2014

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