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Monday, August 15, 2011

Perry, Brazil, and the Ex-Im Bank

Politico reports on an exchange between Governor Rick Perry and a New Hampshire voter:
She pushed him on foreign aid, and he said, “We gotta completely (redo) the foreign aid system. Sending money to people that hate us, doesn’t make sense. Giving $2 billion to the Brazilians to do off shore drilling … doesn’t make sense.”

Charge: The U.S. government is giving away more than $2 billion in taxpayer dollars to Brazil's largest oil and gas company to drill for oil in Brazil.

Fact: The Bank has established a $2 billion financing opportunity for Petrobras to use solely for the purchase of American-made goods and services. So far, Ex-Im has approved $300 million to finance Petrobras' purchase of U.S. oil and gas equipment and services.

The funds go to American exporters as payment for their sales to the Petrobras.

If Petrobras fails to award contracts to U.S. companies for the remaining amount, it will not access those dollars.

Of note, the Bank is self-sustaining and no taxpayer dollars are involved.

Charge: The loans to Petrobras represent a giveaway of U.S. tax dollars.

Fact: Ex-Im is a self-funding, independent agency which operates at no cost to the taxpayer. Ex-Im does not make grants, and charges fees and interest for the financing it provides. In fact, since 2006 the Ex-Im Bank has generated more than $3.4 billion in revenue for U.S. taxpayers.

Charge: America is exporting jobs to Brazil as a result of the loans.

Fact: Only American made goods and services qualify for Ex-Im Bank loans or guarantees.
The Export-Import Bank of the United States (Ex-Im Bank), an independent federal government agency, is the official export credit agency (ECA) of the United States. It helps finance American exports of manufactured goods and services, with the objective of contributing to the employment of U.S. workers, primarily in circumstances when alternative financing is not available. Ex-Im Bank also may assist U.S. exporters to meet foreign, officially sponsored, export credit competition. Ex-Im Bank’s main programs are direct loans, loan guarantees, working capital
guarantees, and export credit insurance. Ex-Im Bank transactions are backed by the full faith and credit of the U.S. government. The Bank operates under a renewable charter, the Export-Import Bank Act of 1945, as amended, and has been reauthorized through September 30, 2011 (P.L. 109-438). The charter requires that all of the Bank’s financing have a reasonable assurance of repayment and directs the Bank to supplement, and to not compete with, private capital.