News Column

EDITORIAL: What's bad for Boeing is 'good' for Labrador

August 20, 2014

Moscow-Pullman Daily News, Moscow, Idaho



Aug. 20--Collateral.

When you get a mortgage to buy a house, the bank relies on your house and the land it sits on being collateral that can be foreclosed if you don't pay. If you don't pay your debt, the bank takes back your house and property. The laws and law enforcement agencies are on the bank's side.

International trade doesn't work that way.

If Wells Fargo were to loan China Eastern Airlines millions of dollars to buy a new 787 airliner or if Boeing were to agree to let China Eastern pay in installments for the plane, there is no real collateral.

If China Eastern refuses to pay for this hypothetical plane now hypothetically flying a route from Beijing to Shanghai, who would repossess it? Certainly not the sheriffs from King or Snohomish County, Wash., where it was built, or Cook County, Ill., where Boeing is headquartered.

That's where the federal Export-Import Bank comes in. It provides a loan guarantee that allows Boeing to make the sale and keep the production lines rolling in Everett and Renton. Then, if the customer defaults, Boeing or Wells Fargo can turn to the bank to be made whole. That part seldom happens.

Supporters of the Export-Import Bank, the authorization for which expires at the end of the month, like to talk about the hundreds of small businesses -- including grain exporters -- the bank supports with loans and guarantees. In fact, 82 percent of its money in 2012 went to support sales of Boeing airliners to foreign countries.

The bank says it doesn't compete with private banks, but provides financing for deals that would otherwise not take place because banks are unable or unwilling to accept the political or commercial risks involved. Critics say it provides companies with sweetheart deals below market rates.

U.S. Rep. Raul Labrador, R-Idaho, is among the free-market opponents of renewing the Ex-Im Bank authorization. He says while the bank is important to Boeing, Delta Airlines, a U.S. carrier that doesn't have access to those deals for its new planes, hates it. So, government should stop distorting the market.

Labrador needs to consider whether Boeing or Delta Airlines, based in Atlanta, is more important to the corner of the country he represents.

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(c)2014 the Moscow-Pullman Daily News (Moscow, Idaho)

Visit the Moscow-Pullman Daily News (Moscow, Idaho) at www.dnews.com

Distributed by MCT Information Services


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Source: Moscow-Pullman Daily News (ID)


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