Lobbyists keep Export-Import bank alive despite economists concerns about cronyism

For four years running, Gina Rinehart has been ranked the richest person in Australia. This year, her estimated net worth exceeds $20 billion, though that’s down a bit from an estimated $29 billion net worth in 2012, according to Business Review Weekly, which tracks the richest people in the Land Down Under.

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Hancock Prospecting, the company Rinehard has chaired since 1992, is doing equally well for itself. In 2011, it earned more than $870 million, and it is one of the most successful mining and mineral companies in the world. But in 2012, the United States government handed over nearly $700 million in taxpayer-financed loans to a subsidiary of Hancock Prospecting, Roy Hill Holdings, ostensibly so the multibillion company could afford to purchase American-made mining and construction equipment for a massive new iron ore mine in the Australian outback. The loan was financed through the Export-Import Bank, a little-known entity of the federal government that was established in 1938 and routinely hands out American tax dollars to companies in other countries so those same companies can use those funds to buy American products. In theory, the bank is supposed to boost American exports essentially by using taxpayers to subsidize foreign firms’ purchases. But critics of the bank say it is little more than another tool for crony capitalism — a way to make sure taxpayers’ money flows to favored companies. More...