A bipartisan group of senators has renewed the debate over boosting U.S. financing for infrastructure, proposing a new government corporation – the Infrastructure Financing Authority (IFA) – that would provide loans, loan guarantees, and perhaps other forms of credit enhancement to eligible projects. These would generally be large infrastructure construction and maintenance endeavors in areas like transportation, energy transmission, and water quality. IFA is structured as a self-sustaining agency so that, should its procedures prove correct, it poses no taxpayer risk and creates a significant revenue source from which to fund urgently-needed projects. However, aspects of its structure – e.g., the lack of a capital base or prudential regulator – may pose concern despite the use of the government-corporation structure that insulates IFA from direct access to the Treasury should its credit risk undermine its capacity to honor loan guarantees and any other credit enhancements it offers.
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