Rohatyn Warns of Infrastructure Challenges

WASHINGTON — The United States faces an immense challenge with an economy expected to be $2 trillion smaller than what it should be over the next five years and growing unemployment that is likely to last “for at least some time,” according to Felix Rohatyn, the veteran investment banker who helped save New York City from bankruptcy in the 1970s.

Rohatyn, who is speaking Monday at a public and infrastructure finance conference here sponsored by the National Association of Bond Lawyers and the American University College of Law, said the federal government can directly address -- and reverse -- both of these economic maladies by taking a long, hard look at how it finances infrastructure.

In an interview, Rohatyn said the government ought to dedicate as seed money for a national infrastructure bank the equivalent of the $50 to $60 billion of the federal funds it spends annual on transportation.

“If you made that the equity in an infrastructure bank, you could raise $250 billion and could bring in foreign partners as well to create something extremely important,” he said. “Ultimately, I think that infrastructure, if it’s done right, it’s a big employer, too.”

Rohatyn has been calling for a national infrastructure bank for the better part of two decades. While there have been a number of legislative proposals floated by President Obama, Senate Banking Committee chairman Christopher Dodd, D-Mass, and others to establish one, lawmakers have yet to seriously consider a large enough bank, Rohatyn said.

The Chinese government is following the example the United States following World War II by investing in railroads, airports and port projects, through deals that are partly financed by the Asian Development Bank, “which would be the parallel model to what we’re talking about here,” he said.

At the conference, Rohatyn is to speak on a panel along with Pennsylvania Gov. Edward Rendell and Aaron Klein, deputy assistant secretary for policy coordination at the Treasury Department.

The panel also is to include Rep. Rosa DeLauro, D-Conn., who has introduced legislation to establish a national infrastructure development bank that could issue “public benefit bonds” that are exempt from state and local taxes to finance infrastructure projects over the next 15 years. DeLauro  is to give keynote remarks during a luncheon earlier in the one-day conference.

The conference, the first of its kind sponsored by NABL, also will include panels on expanding the federal role in state and local finance, with Alice Rivlin of the Brookings Institution, as well as a panel on tax-exempt and tax-credit finance, with Maryland Treasurer Nancy Kopp and House Ways & Means Committee senior counsel John Buckley.

A later panel will focus municipal securities regulation, with former Securities and Exchange Commissioner Annette Nazareth.

The conference will also mark the 20th anniversary of the so-called Anthony Commission report, which was issued in October 1989 an made recommendations for easing the burdens of ax law restrictions imposed on municipal bonds by the Tax Reform Act of 1986.

Those interested in attending the conference can register on NABL’s Web site, www.nabl.org. Registration is free except for attorneys seeking Continuing Legal Education credits.

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