In today’s New York Times, columnist Bob Herbert spotlights the congressional proposal for a National Infrastructure Development Bank that would issue bonds, make loans and create securities to help finance needed rebuilding projects around the country. As Herbert put it:
[T]here was a development in Congress last week that
should have been seen as significant but could not elbow its way into
the media precincts obsessed with Rush Limbaugh, Dick Cheney and swine
Representative Rosa DeLauro, a Connecticut Democrat,
introduced a bill to establish a national infrastructure development
bank that would use public and private capital to fund projects of
regional and national significance. These are projects that are badly
needed and would be a boon to employment.
DeLauro’s plan would give the final say over which transportation, energy and telecom projects receive assistance from the development bank to an independent board of directors. Separate risk management and audit committees would keep an eye on the bank’s balance sheet, which would get a $5 billion annual infusion of taxpayer money to help attract more capital from private investors.
The development bank has won backing from a collection of strange political bedfellows, including the U.S. Chamber of Commerce, the AFL-CIO and Felix Rohatyn, the investment-banking magnate who helped New York City avert insolvency in the 1970s.
Still, the risk-management aspect of the plan appears particularly crucial. Why? The development bank would be able to "purchase and sell infrastructure-related loans and securities on the global capital market," according to DeLauro’s summary. That phrase sounds innocuous enough, but several communities that issued infrastructure-related bonds to pay for recent improvement projects have found themselves facing bankruptcy after making risky bets to help keep pace with fluctuating interest rates.
With the municipal bond market on shaky ground right now, it’s easy to envision the infrastructure bank taking — to use a euphemism — creative measures on the market to help convince private investors to participate. It’s important, therefore, for the bank to ensure states and localities aren’t getting talked into overly complex financing arrangements.
Does the infrastructure bank proposal have a real future in Congress? Its current 27 co-sponsors in the House are all Democrats, but former GOP senator Chuck Hagel signed onto a similar plan in 2007, and its appeal is undeniably bipartisan. Transportation Secretary Ray LaHood also has spoken approvingly of the bank, meaning that it has a strong chance of appearing in the federal transportation bill slated for introduction this summer.
So Herbert could soon get his wish for more media coverage of DeLauro’s proposal … if the House pushes forward to a final vote on its transportation bill.