U.S. infrastructure bank idea gets Congressional boost

WASHINGTON May 11 (Reuters) - President Barack Obama's vision for an infrastructure bank that attracts private investment got a legislative boost on Wednesday from two Democratic allies in the U.S. Senate.

Commerce Committee Chairman Jay Rockefeller and Sen. Frank Lautenberg, both transportation leaders, unveiled a bill to create a fund to finance projects outside of typical government-run mechanisms for distributing infrastructure money.

The fund's structure, down to the annual appropriation of $5 billion, is nearly identical to one proposed by Obama in February in the budget he sent to Congress.

Since running for president, Obama has pledged to create a fund that some have called the "Federal Reserve of Infrastructure."

Congress has reacted coolly to similar proposals over the years, preferring to stick with formulas that give lawmakers a strong say in what projects are funded.

The proposal in the Senate would allow states and others to leverage federal money to attract private capital. Potential private investors, including pension funds and corporations, are eager to participate in U.S. infrastructure development, but first want to see a long-term commitment from policymakers and Congress.

House of Representatives Transportation Committee Chairman John Mica, a Republican, has said he would introduce a comprehensive transportation bill this year. It is unclear if an infrastructure bank will be part of that measure.

Under the Senate bill, an executive director would run the fund and a board of directors including the Treasury, Commerce and Energy Secretaries would draft its investment plan.

The fund would also provide loan guarantees and finance energy, water, and telecommunications projects. Obama had suggested a more limited scope of just transportation work.

The legislation also would put $600 million into a competitive grant program for rail, highway, air and water transportation. The transportation secretary would determine who receives the grants.

Following the success of the "TIGER" program in the economic stimulus plan of 2009, Obama had suggested creating a competitive grant program to distribute $2 billion for capital investments. Republicans have criticized the TIGER program as being secretive and the selection process as unfair.

In the Senate in March, Democrat John Kerry and Republican Kay Bailey Hutchison unveiled a plan to create a financing institution modeled on the Export-Import Bank.

(Reporting by Lisa Lambert and John Crawley; Editing by Andrew Hay)