(Nathan Mehrens) – A recent response from the Export-Import Bank (Ex-Im Bank) to a Freedom of Information Act (FOIA) request made by Americans for Limited Government sheds some light on how the Bank isn’t needed. This is not a talking point from a Republican Member of Congress, but rather, it comes in the form of meeting notes made by Michele A. Kuester, who serves as the Bank’s Vice President of Business Process for their Total Enterprise Modernization project.
The notes here are in the form of a memo written by Kuester in June of 2012 after a meeting held by the Private Export Funding Corporation (PEFCO), an entity closely tied to the Ex-Im Bank. The meeting was for a Bankers’ Advisory Board and Export Council and was hosted by PEFCO which is owned by several banks and industrial shareholders. One such industrial shareholder is The Boeing Company, which has been a beneficiary of both Ex-Im Bank and PEFCO.
In the section of the memo discussing the status of the potential reauthorization of the Bank, Kuester stated: “Caterpillar reported that a number of the banks they work with have approached him to see if Caterpillar would be willing to tell Ex-Im Bank to stop offering so many direct loans. He has been telling them that he won’t (although he did accomplish the same thing by bringing it up in this conversation.)”
In discussing exporter issues, Kuester stated: “Although there was a mix of project-oriented (long-term) and product-oriented (medium-term) exporters all indicated that they were generally looking for ways to avoid using Ex-Im Bank.”
This is astounding given the heated rhetoric coming from the Bank and its supporters about how the sky would fall and about supposed job losses if the Bank is not reauthorized by Congress this year.
Additionally, on exporters, Kuester states that given “our long-standing Policy restrictions (specifically, content) they were switching to private insurers – who might have the same credit requirements, but no Policy restrictions and a much faster processing time.” These “content” restrictions relate to requirements that eligible products have “more than 50 percent U.S. content based on labor, material, and direct overhead.” Kuester states that some companies such as “Bechtel noted that so far they have been winning sales without having to provide a financing offer – so they aren’t active at Ex-Im Bank.”
She also states, “Siemens, on the other hand, noted that the Policy requirements were significantly onerous and as a result they were trying all kinds of workarounds to avoid using Ex-Im Bank.” These “policy requirements” require things like shipping products on U.S. flag vessels.
Taken together, these statements from some of the very companies that the Ex-Im Bank is supposed to serve paint a picture that just maybe the Bank really isn’t all that necessary after all. The general sense is that companies use the Bank when convenient to do so, but don’t really worry about situations where they can’t use the bank. Private financing seems to work just fine for most. And, in some instances, they actually see the bank as being unhelpful as it is competing with the private sector.
These unvarnished statements and their implications should be duly considered in the debate over whether Congress reauthorizes the Ex-Im Bank. After such due consideration, Congress may well come to the same conclusion as many in the industry, that the Ex-Im Bank isn’t really needed.
Nathan Mehrens is President of Americans for Limited Government Foundation. NetRightDaily.com is a project of Americans for Limited Government. The project, launched in August of 2008, offers liberty-minded thought on the federal government as well as the threats that exist to individual liberty at all levels of government.