Monday, October 11, 2010

Obama's $50 billion Infrastructure Bank

President Obama conducted a hard sell today on a $50 billion national infrastructure bank.  It'd already grown from $5 billion to $10 billion a year ago.  The now $50 billion would join mountains of private cash dedicated to infrastructure.  Wall Street and private equity firms have $120 billion ready to invest in infrastructure.

Ironically, desperate state and local governments look to lease revenue streams on a long term basis.  Chicago leased its parking concessions in two separate deals.  Pittsburgh took bids on leasing its parking assets. Citizens of Pittsburgh might want to call their Chicago cousins to find how rapidly parking meter rates soared.  They're slated to rise further, even though Chicago spent 75 years of lease proceeds in four short years.

Obama showed his usual humor in today's speech.  He lambasted the country for not investing enough in infrastructure the last two decades.  Obama did so after proudly introducing the government leaders responsible for pinching infrastructure pennies. Former Secretary of Commerce and Transportation Norman Mineta has several dogs in the infrastructure hunt with his work at Hill & Knowlton and his board service at Horizon Lines and AECOM Technology.  Sam Skinner has a long list of corporate board seats.

Here's what Obama might have said under a "no lying" spell.

The federal government will provide billions in capital leverage for private equity underwriters to profit handsomely.

Stressed local and state governments will sell their infrastructure revenue streams on the cheap, a sign of difficult economic times.  How will this impact you?

Your parking meter rates, sewer, water and road tolls will go up, but investors will garner guaranteed 20% annual returns.  That's good news in tough economic times.  

Let's give a big round of applause to my profit loving friends from Chicago.