House speaker sees infrastructure bank as option

Speaker of the House Nancy Pelosi (D-CA) speaks about the state of the union at the National Press Club in Washington, DC, January 25,2008. Pelosi raised the possibility on Friday of creating a federal infrastructure bank to help pay for roads, subways and other projects that could create jobs and improve the environment.

NEW YORK (Reuters) - A top Democrat in the U.S. Congress raised the possibility on Friday of creating a federal infrastructure bank to help pay for roads, subways and other projects that could create jobs and improve the environment.

The new debt-selling bank would be an independent federal entity that would evaluate major projects and use various financial tools to fund them, explained House of Representatives Speaker Nancy Pelosi of California.

"With the economy slowing down and job losses accelerating, we must look for opportunities to take advantage of the stimulative effect of investing in infrastructure," Pelosi said in a speech prepared for delivery to the Regional Plan Association, a think tank.

The new bank could sell 50-year debt, perhaps to pensions, she said, suggesting current investment curbs might be eased.

Improving roads and public transit would cut reliance on imported oil, Pelosi said, noting 90 percent of this fuel is burned for transportation.

Pelosi raised the idea of a cap-and-trade system for greenhouse gas permits that could raise money for mass transit or other infrastructure needs, but she provided no details.

She vowed to explore these "innovative" approaches in Congress, where Democrats think more should be done to stimulate a lagging U.S. economy. President George W. Bush wants to first see the impact of a $168 billion economic stimulus law enacted in February.

Pelosi told her audience: "I believe that if there were one item in the stimulus package -- if the President said, 'Just pick one and we'll go whole hog on it,' it should be infrastructure." She added the investments should be "substantial."

Pelosi predicted the nation will see more public-private partnerships, though she stressed the importance of safeguarding taxpayers. That concern has scuttled or delayed blockbuster deals to sign long-term leases for major highways to private investors in a number of states, from Texas to New Jersey.

"It is important to ensure that the public interest is well served in public-private partnerships, since they are here to stay and likely to grow in importance," Pelosi said.

Drivers likely will be paying higher tolls, she said, again adding safeguards were needed. "Our challenge will be to ensure that tolls are equitable, that they reduce congestion for everyone, and the revenues are used to improve infrastructure, not siphoned off for other purposes."

Pelosi gave her address in New York City, weeks after the state Legislature killed Mayor Michael Bloomberg's congestion pricing plan, costing the city $354 million in federal dollars.

The mayor proposed fighting gridlock by charging commuters $8 to enter Manhattan. Bloomberg modeled his plan after systems used in Singapore and London; a few other U.S. cities are experimenting with this method.