CG/LA recently sat down with the the prestigious InterMedia founder and BluePrint Partner, Leo J. Hindery, about the National Infrastructure Bank in advance of his anticipated Washington Monthly article.
Q: Briefly tell us, what will the National Infrastructure Bank do?
A: The National Infrastructure Bank, if there is one, should be a wholly-owned government corporation with non-partisan directors appointed by the president and confirmed by the senate. These directors should be experts when it comes to infrastructure and macroeconomics, and included among them should be women and men with proven expertise in heavy construction, business, labor and government policy.
In order to make the Bank as informed as possible regarding the very different infrastructure development needs across the country, the bank should, like the Federal Reserve, be ‘regionalized’ into operating districts.
Q:Where does the money come from? Does it figure into the national debt?
A: The Bank would be capitalized with and find its liquidity from $1.5 billion of long-term loans to it by the nation’s large state and municipal pension plans and by some of the large sovereign wealth funds. The interest rate on these loans would be consistent with the interest rate these plans and funds are currently earning on their low-risk fixed-income investments.
There will be some modestly “scored”, mutually agreed support from Treasury to induce plans and funds to make these loans to the Bank.
Q: What kinds of projects will it target? Will it target specific sectors and sizes of projects?
A: The Bank will address the $1.5 trillion of funding which the American Society of Civil Engineers (ASCE) believes to be outside the capabilities of current state and municipal budgets for projects which are directly or indirectly ‘revenue generating’.
Q: Why do we need an infrastructure bank when there is so much liquidity on the sidelines?
A: The Trump administration’s current proposed infrastructure plan has been to support a $1.0 trillion “Public Private Partnership” (or P3) – not a “bank” – funded with $200 billion from Congress (the “Public”) and with $800 billion in the form of project loans from Wall Street institutions like Goldman Sachs and Blackstone (the “Privates”). This massive $200 billion authorization by Congress would be immediately scored by OMB, and the annual interest rate which these Wall Street institutions would demand on their project loans would be on the order of at least 10-12%, which would lead to egregious and unacceptably high users fees on completed projects.
Q: Will the bank be headquartered in Washington?
A: The Bank will be headquartered in DC but as noted it would, like the Federal Reserve, be ‘regionalized’ into operating districts.
Media executive, progressive policy wonk and (former) race car driver. Hindery is the author of “The Biggest Game of All” (Free Press, 2003) and “It Takes a CEO: It’s Time to Lead With Integrity” (Free Press, 2005). Hindery received his undergraduate degree from Seattle University and an MBA from Stanford University. He is a friend of CG/LA and a BluePrint partner.
This is a short interview conducted by CG/LA in preparation of Mr.Hindery's feature in Washington Monthly.