President Barack Obama’s proposed bank to lure private cash for highway and water projects should be funded solely by the U.S. to avoid flaws that led to a takeover of Fannie Mae and Freddie Mac, a UBS AG executive said.
UBS Americas Chief Executive Officer Robert Wolf told the Senate Banking Committee today in prepared testimony that the “time has come” for a U.S. infrastructure bank, which Obama proposed this month in a $50 billion plan to rebuild roads, railways and airport runways.
“Funding its equity in this manner will avoid the problems seen with the government-sponsored enterprises, such as Fannie Mae and Freddie Mac, which are hybrid organizations chartered to be owned by private shareholders while benefiting from government sponsorship,” Wolf said in testimony for a hearing on the proposal. “The national infrastructure bank should be fully owned by the federal government with no private shareholders.”
Obama, during his 2008 campaign for president, proposed a $60 billion bank focused on transportation projects of national significance. Congress hasn’t acted on the idea.
The U.S. seized Fannie Mae and Freddie Mac, the largest sources of mortgage money, in September 2008 amid investment losses that pushed the firms to the brink of collapse. The two companies in 2008 started buying mortgages with credit scores that suggested the loans were more likely to default.
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