In many ways, the Export-Import Bank is repeating the tragic mistakes of the early 21st century housing bubble on an international scale. Since 1996, the International Monetary Fund and World Bank have maintained a list of Heavily Indebted Poor Countries (HIPCs), which face debt burdens their governments cannot sustainably manage. Since fiscal year 2007, the Export-Import Bank has added to the debt levels of 20 of the 39 countries listed in some phase of the HIPC Initiative’s debt management process.
Just as Fannie Mae and Freddie Mac convinced low-income Americans to take out risky loans to purchase homes they otherwise wouldn’t dream of buying, the Export-Import Bank sways governments in developing countries to splurge on shiny new air fleets, futuristic wind farms, and unnecessary luxury tour buses-all made, of course, in the U.S.A.
Ex-Im’s records show that $180,000 in insurance was extended to Honduras to cover an aircraft deal with Atlantic Airlines, but the records are incomplete and Ex-Im’s website does not mention this deal. Tanzania, too, took on an estimated $2.5 million in debt in 2013 to purchase aircraft from Cessna at Ex-Im’s urging.
According to its own records, the Export-Import Bank extended almost $3 billion in financing to HIPCs from 2007 to 2014. Assuming that the Bank covered the standard 85 percent of the loan value, this could mean that these already indebted countries took on another $3.5 billion in debt so that companies like Boeing could make a little more money each year.
Indeed, super-wealthy companies such as Boeing, with its market capitalization of $91 billion, and Lockheed Martin, with its $50 billion profit in 2013, are the Ex-Im Bank’s true masters. The program allows them to sell more of their products abroad without the headache of doing the hard financing work themselves.