By Nancy Spannaus

May 8, 2024—On April 30th the Coalition for a National Infrastructure Bank (NIB), in conjunction with Congressman Danny Davis (D-Ill), sponsored a briefing for Congressional staff on the National Infrastructure Bank Act of 2023, HR 4052, on Capitol Hill. The bill currently has 34 sponsors. If implemented, the NIB would provide $5 trillion worth of credit devoted strictly to repairing and upgrading the United States’ decrepit infrastructural base.

Briefing on National Infrastructure Bank Held on Capitol Hill

There were 25 participants in the briefing, which included representatives from 16 Congressional offices. The participation was bipartisan.

The Funding Question

The speakers made the incontrovertible case on the need for the NIB. Dr. Nomi Prins[1] was the moderator and the lead speaker. She delineated the contours of the bill and stressed that it would create an institution which was needed in this time in history. It would funnel the necessary financing into urgently needed projects. Dr. Prins cited her credentials in this matter. She was a former Managing Director at Goldman Sachs and Bear Stearns investment banks, and is an author of seven books on the banking system and the relationship of finance to infrastructure and production.

She stressed the point that the private banking community is simply not going to finance infrastructure in any significant amount. The costs are too high and the returns too small. She noted that Citigroup, a major participant in the Municipal Bond market, announced they are exiting the market as the profits no longer justify participation.

Briefing on National Infrastructure Bank Held on Capitol Hill
Lead speaker and author Nomi Prins

She also underscored the unique method of capitalization of the National Infrastructure Bank. It will require no new federal spending, no new federal taxes, and hence will be budget neutral. She said that the idea of exchanging Treasury debt for preferred stock in the bank is not a new idea, but has not been utilized for a long time.

Overwhelming Needs

Another speaker was Alphecca Muttardy, a professional macroeconomist. She is a former Senior Economist at the International Monetary Fund, and the lead economist with the Coalition.

Ms. Muttardy gave a tour de force presentation on all of the needs of the country on infrastructure modernization. She delineated the needs in water systems, including replacing the 10 million lead water service lines that are poisoning millions of Americans. She went through the horrible shape of flood water and wastewater systems, the power grid, bridges and roads, and everything else. She praised the Bipartisan Infrastructure Law (BIL) as a “very important down payment,” but noted that the BIL will expire in two and a half years.

While a really good bill, the BIL falls short on covering all the needs. It was originally proposed to be $3.5 trillion, but was ultimately cut to $550 billion in new money over five years to cover all infrastructure upgrades for the whole country. Ms. Muttardy made the convincing case that the need is at least 10 times that amount. Hence, she urged Congress to pass HR 4052, to complement the BIL and really finish the job.

Professor Phil Harvey, emeritus Professor of Law and Economics at Rutgers Law School, gave a startling speech (by zoom) on the mechanics of the NIB. He went through the purpose of private banking, while outlining the general methods of capitalizing and running private banks. He then walked the participants through the workings of the Federal Reserve System. The Fed is another type of basically private bank, but serving to direct monetary and jobs policy, in conjunction with the Congress. He said that the Fed was in effect a private bank, but with this dual mandate.

Briefing on National Infrastructure Bank Held on Capitol Hill

The National Infrastructure Bank would also be in effect a private bank, albeit created by and overseen by the government. It would have a mandate to finance infrastructure. It would be overseen by the FDIC and the OCC, just like any bank, but would be enabled to dramatically increase infrastructure spending in the nation. It would fill the hole in the private banking system, the Fed, and Congress which is limiting new infrastructure financing.

Rounding out the speakers’ list was New York attorney Jo Anne Simon, who also serves in the New York Assembly. She completed the picture by outlining the dramatic infrastructure needs of New York state and how the NIB could provide the needed new financing.

Questions Answered

The question-and-answer period with the Congressional staffers helped to flesh out the import of the bank. One question asked how the NIB and the Fed would interact. Others probed the capitalization method of the NIB, a novel idea to most.

These questions allowed the speakers to also delve into the history of the country and present the successful record of the previous institutions, much to the shock of the audience, who had never heard of the policy! The fact that the first bank was started by Alexander Hamilton, and the last was initiated by Herbert Hoover and upgraded by Franklin Roosevelt, really caught the attention of the audience.

Background materials were made available to the staff, with the promise of further discussions.[2]

[1] In the words of her website, Prins’ books “shed light on the dark corners of the global economy, while empowering people with the knowledge they need to make informed decisions.”

[2] For a recent overview of the popular support for the NIB, click here.

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