Anyone who observes and tries to decode the seemingly-illogical machinations of Washington, D.C. inevitably finds themselves asking: Who actually makes the wheels of the bureaucracy turn?
The answer varies, but here’s a hint: It’s usually not the American people. And here’s another hint: Having billions of dollars to throw around usually helps.
If there’s one agency that understands this particularly well, it’s the Export-Import Bank of the United States. In 2013, more than half of Ex-Im’s total funding – about 60 percent – was collected by a group of 10 major corporations.
This pack was led by Boeing, which alone accounted for about 30 percent of all Ex-Im authorizations in 2013. The following year, that number jumped to 40 percent. And the Boeing favoritism trend is nothing new.
Apparently, Ex-Im officials believed not only that was this a good use of their taxpayer-backed funding but also that this cozy relationship allows them to give Boeing access to their agency’s inner workings.
This was detailed in a series of emails exchanged between Boeing management and top Ex-Im officials in 2012 concerning changes in how Ex-Im studies the economic impact of potential aircraft financing deals (read: deals with Boeing). Ex-Im actively sought Boeing’s help in crafting official U.S. government policy that would affect the company directly, and over several months, Boeing was only too happy to weigh in. The emails were initially unveiled by The Wall Street Journal and have recently been published in full in The Washington Examiner, thanks to a Freedom of Information Act request.
Boeing made an early overture in July 2012. Kristen Richmond, director of strategic regulatory policy at Boeing Capital Corporation, emailed senior Ex-Im officials James Cruse and Robert Morin along with policy analyst Claire Avett and others to discuss Boeing’s ability to submit comments on the economic impact of the Bank’s transactions.
“I understand that there may have been some hesitation on your part for Boeing to proactively submit comments on deals,” Richmond said, adding, “[w]e can certainly have a discussion about that.”
By August, this discussion must have occurred and all “hesitation” on Ex-Im’s part had evaporated. On August 7, Claire Avett told Boeing executives that she “would anticipate that we would rely heavily on the resources at Boeing” as the bank crafted their rules.
On August 31, Avett submitted the Bank’s proposal – “an internal Ex-Im document still in draft form” – to the Boeing team for their review. Her superior, Robert Morin, followed up with a note reminding Boeing that they “should not underestimate the importance of developing a new set of procedures that are defensible as complying with our statutory provisions.”
Why? Because otherwise, their business with Ex-Im could suffer, “Subjecting and applying other transactions to detailed analysis under economic impact procedures has had the effect of killing most of those deals … if Boeing expects Ex-Im Bank to continue supporting wide-body aircraft, we need to get this right.”
Kristi Kim, director of aircraft financial services at Boeing Capital agreed, “The new schedule will put some pressure on us, but understand that this is very important to get right.”
There followed a steady stream of correspondence in which Boeing and Ex-Im staffers went back and forth on various points on how to conduct economic impact studies. The emails suggest the coordination may have gone as high as Fred Hochberg, chairman of the Export-Import Bank, and Boeing Capital’s then-president Mike Cave.
Why all the collusion? Why was Robert Morin so insistent that “we need to get this right”?
Because the reality is that the deals between Boeing and foreign airlines, which are underwritten by Ex-Im, actually do kill American jobs. The Air Line Pilots Association has estimated that the losses are already in the thousands.
When Congress considers this summer whether to renew the Bank’s charter or allow it to expire, hopefully these emails, the bank’s role in killing domestic jobs and its story of desperate closed-door wrangling will factor into Congress’ decision to end this boondoggle once and for all.
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