Banking on Infrastructure

September 8, 2010

Following President Obama’s proposal for an infrastructure bank, Robert Puentes discusses with Greg Millman of Dow Jones Investment Banker ways to maximize efficiency for investments. Puentes stresses the need for prioritizing transportation projects and tying funding to the building of a stronger national transportation network.

GREG MILLMAN: This is Greg Millman of Dow Jones Investment Banker with Robert Puentes, senior fellow with the Brookings Institution. Welcome to Dow Jones Investment Banker.

ROBERT PUENTES: Thank you for having me.

MILLMAN: The president has proposed the creation of a national infrastructure bank. First question, what is this going to mean to bankers?

PUENTES: Well, I think this is a big deal. Right now, we don’t have a really good mechanism for financing big, large, complex infrastructure projects here in this country. So, what we’re talking about is something that would create an institution in order to take those complex financing packages, bundle them, and focus on those projects that really do meet some measures of national or regional significance. So for bankers, and for the private market, they would be involved in both the borrowing side, either coming to this institution with a consortium of public or private sector entities to borrow against some of the funds that are there, or to buy or purchase some of these bonds. So there’s lots of ways they can interface with the bank.

MILLMAN: So you’re talking about big ticket, complicated mega projects?

PUENTES: Not necessarily “mega projects,” but as the nation builds out and as we’re starting to in-fill some of this infrastructure and doing projects in existing areas, they become much more complex, they become much more complicated to do, and they start to run into additional money, particularly in terms of land. So, they just become more complicated just given their variable nature.

View the full video on the Wall Street Journal’s MarketWatch web site »