Economists lined up by the Financial Guaranty Insurance Company (FGIC) to bash a proposed federal infrastructure bond bank told a symposium in Washington that the problem isn’t a lack of capital, but rather the generally poor management of public funding of U.S. transport and water systems.

The Infrastructure Investment Commission set up by Sen. Patrick Moynihan (D-NY) and supported by construction unions has proposed a National Infrastructure Corp. to assist startup projects that could be financed by pension funds from user fees:

• by insuring 70% of development costs;
• credit enhancing preconstruction bond issues; and
• attracting senior debt by lending junior debt for up to 25% of project costs.

FGIC, which makes healthy profits by insuring high-quality municipal debt, is opposed to any meddling in its market from a federal guarantor for lower-rated debt. Its basic position is that the U.S. does not need a new federal entity to intermediate pension funds into infrastructure.