Independent Infrastructure Bank

Discusssion

Why We Need It

John Fullerton:

" The time has come for an intelligent, independently governed, public infrastructure bank, ideally partnering with real banks that see their public purpose as a profession, focused on productive lending in the real economy. The example of the State Bank of North Dakota is instructive in this regard, which has given rise to tremendous new interest in Public Banking models, with banking bills working through the process in over a dozen states, as a partial response to the failure of banking in America.

Rather than subsidize Bank of America in the form of deposit insurance, and reduced cost of debt and preferred equity since the government could never let it fail, and, guaranteeing 80 percent of the credit risk on the rooftop solar deal, for my tax dollars, I’d rather see Uncle Sam make the loan directly via a well-managed, independent infrastructure bank that would benefit from Uncle Sam’s near zero cost of funding, earn the spread for the risk it's taking, and keep the value of the subsidy out of some banker's bonus check, which is where it goes now. Ideally, real banks that understand lending as a profession and the mundane but acceptable returns it entails would participate and share the risk." (http://capitalinstitute.org/node/675)