Banking on infrastructure
Zachary Halaschak
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A private financial institution would be created to help revitalize infrastructure growth across the United States under bipartisan legislation in Congress to establish the country’s first “Federal Infrastructure Bank.”
Reps. Daniel Webster (R-FL) and Colin Allred (D-TX) are sponsoring the legislation, which was introduced in the House earlier this year. The lawmakers say an overhaul of the entire infrastructure system is long overdue. The pair, representing some of the nation’s fastest-growing communities in and around Orlando and Dallas, respectively, envision a Federal Infrastructure Bank that would work with state and local partners to create private infrastructure investments.
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“This is an added influx of money. Certainly it’s not taxes — it’s private money. And it can be used for the infrastructure,” Webster told the Washington Examiner.
“At least in my state, there are many obligations that can’t be met, and we’d love to help meet them,” Webster said, citing the need for road construction in his western Orlando and The Villages 11th Congressional District. “There is a need to build roads that we’re just not going to get to. So, those are the ones that will be probably the most likely to be applied for. And we think it’s going to be a great influx of money.”
Infrastructure has long been a goal for both parties. Former President Donald Trump, who first became a public figure as a builder in New York City in the 1970s and ’80s, touted infrastructure projects in his 2016 campaign. Though once in office, the Trump administration did little to enact it — to the point that “infrastructure week” became a running joke about changing the subject when the Republican president or his administration faced negative headlines.
President Joe Biden’s administration and a like-minded Democratic Congress enacted the Infrastructure Investment and Jobs Act, most commonly known as the Bipartisan Infrastructure Law, in November 2021. The $1.2 trillion law, which drew some Republican congressional support, including from Senate Minority Mitch McConnell (R-KY), pays for a range of programs to build roads and bridges, among other provisions.
So, how exactly would a Federal Infrastructure Bank work? The bank would provide loans and loan guarantees specifically targeted to infrastructure projects, with broad project eligibility since no federal taxpayer dollars are in play. It would be prohibited from engaging in any other banking activity.
A news release by Webster touts it being used for surface transportation projects, ports, electric grid security, broadband connectivity, and the revitalization of Main Street USA.
“The Bank encourages private investment for initial capitalization through tax incentives for those investments during the first three years of operation. This approach differs from prior Infrastructure Bank proposals as it will be entirely capitalized by private investment,” according to the release.
The idea has been around since the first year of the Trump administration, said William T. Nolan, founder of Infra-Bk, whose sole purpose is to push for the establishment of a federal infrastructure bank. Nolan told the Washington Examiner that an iteration of the current legislation was first sponsored in 2017 and has been reintroduced in subsequent years.
“For big legislation, it takes a while for people to really understand and appreciate it. We’ve put in six good years of effort into this so far, and we’ve got a lot of momentum going with us,” Nolan said, noting that the effort has more than 50 people working on getting the legislation passed.
The group’s website includes a slideshow detailing the goals of the legislation. The bank would be a privately owned, managed, and funded national bank charter that would serve as a wholesale lender to projects through state and local governments, private entities, and state infrastructure banks that already exist in some states.
At the outset, there would be a seven-member board of directors that would be elected by the bank’s shareholders and serve four-year terms, only two of which may be consecutive, according to the text of the legislation. Shareholders would get a return on investment through dividend payments and price appreciation of the equity shares.
Nolan said the Federal Reserve Bank, the Federal Home Loan Bank System, and the Farm Credit System are the three entities, though all with differences, that the Federal Infrastructure Bank is being modeled after. He noted the private aspects of each.
“That’s why we have the best banking, housing, and agriculture in the world. And the reason we have D-rated infrastructure is we don’t have an infrastructure bank,” he said.
This isn’t the first time similar legislation has been introduced, although plans to create a Federal Infrastructure Bank have never made it to the floor of the House or the Senate for a vote. Nolan said that while there have been small changes over the years, the base of the legislation remains the same.
“It’s improved in legislative language and in legal language because we’ve had multiple legal reviews by the Office of the Legislative Counsel and different law firms and whatnot,” Nolan said, adding that the “guts of the bill” are the same as years back.
“It’s privately owned, privately managed, and privately funded,” he emphasized.
Webster said that over the last few years, he has been working on pushing the idea forward it hasn’t gotten as far as it can now because before, Republicans were in the minority. He said that not having control of the House meant it was more difficult to move major legislation like that being proposed.
“I’ve been working on it, tweaking it, getting it better — so now I’m going to give it all I’ve got,” Webster said. The congressman added that he hopes the legislation will make it to a floor vote this session.
Webster said that the constituents whom he has spoken with about the Federal Infrastructure Bank love the idea. He explained that while it takes a bit more time to convince members to join the effort, he has been working on doing so and is set to meet with some senators about the proposal as well.
Squire Patton Boggs, one of the most prominent legal and law firms in the country, has been serving as the lead lobbyist in the effort to get a Federal Infrastructure Bank created, according to Nolan. There is also the notion of geopolitical competition. Nolan said that on issues like national infrastructure, the U.S. has been falling behind its international rivals, such as China.
“If we do not rebuild our infrastructure, U.S. infrastructure, the USA will be a vassal state of China,” Nolan said.
In a statement put out earlier this year, Allred noted that his state has been expanding quickly and the formation of an infrastructure bank could help keep up with that growth, building upon other investments in infrastructure.
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“Our rapid growth in Texas requires us to use every tool we can to invest in our infrastructure so our economy can grow and we can remain competitive,” said Allred, representing the northern Dallas 32nd Congressional District.
“This bipartisan bill will create a national infrastructure bank, modeled after similar banks in states across the country to leverage the power of the private sector to spur sustained, long-term investment to create jobs and help meet our infrastructure needs,” Allred said.