It’s not been a good month for the embattled Export-Import Bank. Time is running out for this decades-old creature of Washington, which is set to expire on June 30th, even as the bank and its K Street allies pull out all the stops in their effort to keep “Ex-Im” on taxpayer-backed life support. Unfortunately for the bank and its beneficiaries the systemic problems and deeply troubling reports of rampant corruption are complicating those efforts – and raising plenty of eyebrows on Capitol Hill.
Last week the House Committee on Oversight and Government Reform held an oversight hearing to examine the efficacy of reforms that were imposed on the bank in 2012. And perhaps not surprisingly, as is the case with so many of the “reform” efforts often championed in Washington, the conclusions of the panel’s examination appear to be less than encouraging. Despite claiming to have implemented almost all the reforms required by law in response to long-standing concerns about Ex-Im, bank officials likely left lawmakers with more questions than answers.
The real bombshell however came at the end of the hearing after a question posed by Ohio Rep. Jim Jordan about the systemic corruption that seems to have infected almost every aspect of the bank’s operations. The acting Inspector General (IG) of the Export-Import bank, Michael McCarthy, said that more indictments could potentially follow in the wake of a high-profile indictment already handed down to former Ex-Im official Jonathan Gutierrez. Mr. Gutierrez, who has since pleaded guilty to accepting more than $78,000 in bribes in exchange for recommending the approval of unqualified loan applications. This raises serious questions about whether the “culture of ethics” that Export-Import Bank Chairman Fred Hochberg praised at last year’s Ex-Im hearing.
But the numerous reports of corruption and non-compliance at the bank are only part of the story. Years of risky loans also appear to be coming home to roost. Australian satellite company NewSat filed for Chapter 15 bankruptcy despite receiving more than $300 million in loans from Ex-Im– a fact that should come as no surprise to anyone who has done their homework. By spending over $300,000 on yachts from Cresta Motor Yachts (which, as luck would have it, is owned by NewSat’s CEO) it’s no wonder the company has had some difficulty managing their finances. But before you laugh, remember that it is your tax dollars on the line when these foreign companies fail to pay these generous loans back.
The good news is that the clock is ticking down on the scandal-plagued bank – thanks in large part to the oversight efforts of lawmakers, watchdog groups and taxpayer advocacy organizations. In fact, a coalition of more than 50 such organizations recently released a letter calling on Congress to finally run out the clock on this deeply flawed institution.
Despite the last minute public relations blitz by Ex-Im’s cronies, the narrative seems to get worse for Ex-Im with each passing day. Indeed, the more the American people learn about this obscure financial institution, the less they like it – and this week’s conviction of Mr. Gutierrez is just another stark reminder of why Congress ought to turn out the lights at Ex-Im once and for all. It’s time to get American taxpayers out of the business of financing rampant corruption and risky foreign loans; it’s time to break the bank.