The biggest beneficiary of the corporate welfare represented by the Export-Import Bank wants President-elect Donald Trump to maintain the status quo. Aerospace giant Boeing (NYSE: BA) says if the federal loan agency is abolished, as the Trump vowed to do on the campaign trail, the aircraft manufacturer will lose foreign customers.
Boeing reportedly receives some 40% of all the money the bank doles out each year, and in 2015, it received half of the 40 loan guarantees issued. It’s why the Ex-Im Bank is also known as the Bank of Boeing.
The Export-Import Bank has been around for around 80 years, and though it’s often championed as a tool to help small U.S. businesses to compete on the world stage — in Ex-Im parlance, “small” is defined as up to 1,500 employees and $21.5 million in revenues — two-thirds of its money benefits just 10 U.S. companies. The bank helps foreign parties finance purchases of U.S. exports through loans and loan guarantees.
Boeing CEO Dennis Muilenburg told the Illinois Manufacturers’ Association in Chicago last week, “Many of our customers look to Ex-Im when they can’t secure financing in the commercial market. If international customers of tractors, turbines, airplanes, or satellites can’t get financing from the United States, they’ll simply take their business elsewhere to one of the dozens of other countries with similar export-credit assistance.”
Delta Air Lines (NYSE: DAL), however, has campaigned just as rigorously — though futilely thus far — against extending the bank’s charter. The foreign buyers of Boeing’s planes are Delta’s rivals, the airline says those loan guarantees give them a competitive advantage to the tune of about $2 million per aircraft.
The Ex-Im Bank’s annual reports show that big global corporations like Pemex, the huge oil company owned by the Mexican government, and the U.S. division of Spanish wind turbine giant Gamesa have been among the recipients of its loans.
For fiscal year 2016, which ended Sept. 30, the Ex-Im Bank says it authorized over $5 billion in loan guarantees, with small businesses getting 53% of the loan authorizations. It earned a profit of $284 million that it transferred to the U.S. Treasury.
However, the Ex-Im Bank’s spigot is essentially shut off at the moment for big corporations like Boeing because it lacks a quorum on its board, making it unable to approve new loans or guarantees for sales of more than $10 million.
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