>>Government agency with a history of taxpayer losses keeps at it – Sunlight Foundation Reporting Group
Posted April 13, 2010on:
This is another agency in the government that is long overdue to be discontinued. It has a long history of making loans on projects that take the tax payers money and then go bankrupt. But like all government agencies once they are put in place there is no killing the bird.
Between 2004 and 2009, the U.S. Maritime Administration, or MARAD, a federal agency that supports the U.S. shipbuilding industry and merchant marine, made just one loan from its troubled Federal Ship Financing Program, also known as Title XI. The borrower was Hawaii Superferry Inc., a politically connected company that hired a former chief counsel and deputy administrator of MARAD, among others, to lobby the agency. In 2005, Hawaii Superferry got a taxpayer-guaranteed loan for $139 million to build and operate a pair of high-speed ferries in the fiftieth state. Just four years later, the company filed for bankruptcy, listing assets of a mere $1 million.
Consider Title XI, the Federal Ship Financing Program that granted Hawaii Superferry the loan guarantee. Title XI has been plagued by loan defaults for decades, losing close to $3 billion since the 1980s due to multiple loan defaults. After 1986, when defaults caused losses of a record $1.2 billion, the program was suspended, only to be reinstated in 1993. In 1999, American Classic Voyages, owned by Chicago real estate billionaire Sam Zell, launched an ambitious, plan to expand its operations beyond its New Orleans and Hawaiian routes with $1 billion in Title XI funding. When the plan failed and the company went bankrupt, taxpayers ended up on the hook for $330 million.
The high profile failure of American Classic Voyages led to new scrutiny of MARAD’s Title XI program. Then-Sen. Trent Lott, R-Miss., had supported American Classic Voyages’ bid to win the taxpayer-guaranteed loan because he wanted a shipyard in his state, run by Northrop Grumman , one of Lott’s largest career campaign contributors, to build the company’s cruise ships.
Sen. John McCain called the program a waste of taxpayer money and an “egregious example of pork barrel spending.” President Bush took the unusual step of providing no new funding for the program in his 2002 budget. The director of the Office of Management and Budget, Mitch Daniels, labeled the program an “unwarranted corporate subsidy.”
So how do they get away with it? The companies getting loans from the U.S. Maritime Administration, or MARAD, a federal agency that supports the U.S. shipbuilding industry and merchant marine, using tax payers dollars hires high powered lobbyist and makes campaign contributions again using tax payer dollars which then assures them of the loans of tax payers money they are applying for, that’s how! BB