FAQS ON THE National Infrastructure Bank (NIB) (Updated August 2025)

Why do we need a public National Infrastructure Bank (NIB)? Because there is not enough financing coming from federal, state, or local budgets, nor from bank lending. As evidence: the unfunded gap for infrastructure has grown by 40% over the last 4 years, according to the American Society of Civil Engineers. There simply is not enough money in today’s federal or local budgets to adequately finance infrastructure. The NIB is big enough at $5 trillion to cover all of the unfunded gap for infrastructure and more.

How is the bank capitalized? Through a swap of U.S. Treasuries held by private investors, which are swapped for preferred stock in the NIB. This preferred stock will pay investors a higher premium, to entice their investment. The NIB will be backed by the full faith and credit of the government, providing AAA-rating, a requirement for some holders of Treasuries. 

How is the bank budget neutral? No new federal appropriations are required to subsidize NIB lending operations. The NIB is financially independent, making money much the same as a commercial lending bank.

How is the NIB different from other Federal proposals? The NIB as set out in HR4052 is a true deposit-taking bank designed at the outset to cover all of our nation’s infrastructure needs. It garnered growing Congressional support (48 co-sponsors in the last session). Another proposal (HR1235) is a revolving fund with no specified lending size, no directed coverage, no government guarantee (accordingly pension funds might not invest), and little Congressional. The NIB is sized at $5 trillion to ensure that it can fulfill its purpose of financing all unfunded infrastructure needs at low borrowing costs.

Who can borrow from the NIB? Any public entity – a state, county, city, utility, or a transit, housing, or port authority – that owns public infrastructure can borrow for any one of 21 project areas: roads, bridges, transit, water infrastructure, the electric grid, affordable housing, etc. Such a loan can also cover the 20% co-pay needed to obtain a federal grant.

How does the loan process work? A municipality or utility can apply for a project loan of its own choosing, at any NIB branch or partner bank. NIB loan officers assess the request much like a small business loan. The NIB Board of Directors approves loans. Back-office engineers can help the municipality formulate the loan request, and help with project management. Loan officers will periodically check up on project roll-out and loan performance.

What are the loan terms? The NIB will offer low interest loans, with long maturities, and flexible repayment terms, to keep financing costs at a minimum. The NIB will set its own fixed interest rates, aiming at about 0.5% below municipal bond interest rates. Maturities can match the lifetime of the project. A loan can also be refinanced at a lower rate, or to extend repayment terms. If a municipality cannot afford even a low-cost loan, a Trust Fund within the NIB can extend grants in some cases.

How do repayments work? A municipality or utility can repay loans out of user fees, revenue bonds, dedicated taxes, or general revenues. Experience shows that municipalities strive to make timely repayments on their borrowings in order to maintain a good overall credit rating. Importantly, NIB operations are expected to double GDP growth, which will bring in higher tax revenues to federal, state, county and local government coffers, ensuring that loans can be repaid. 

Who opposes it? Some legislators – including both Democrats and Republicans – believe that infrastructure must be paid for only through the budget. Others believe that federal institutions are inherently bad. They are not aware that four previous off-budget institutions just like the NIB built our nation’s canal-rail-bridge-road transportation systems, water and hydroelectric dam systems, rural electrification, and even housing after WWII. Moreover, our Constitution supports the creation of such institutions to “promote the general welfare” (Article 1, Section 8). 

What does the banking community think? Many bankers, including state public bankers, are intrigued. They see the NIB as helping to expand their commercial lending business, in particular through small and medium business lending to construction and manufacturing companies. A provision in the bill allows the NIB to partner with community and public banks to co-lend for development projects. The NIB can also retain local banks as collaborators or “storefronts”, paying them fees for these services. The NIB is a Lender of Last Resort, so that all project loan requests would be offered to commercial banks first.

What does President Trump think? During his first term, President Trump often stressed infrastructure spending, but was not able to come up with funding to advance it. During this term he is pushing for tax and spending cuts in the budget, which involve cuts in infrastructure spending. The President has not been approached directly on the NIB bill, although several people with access said they will get this to his Cabinet members. No responses yet. 

How does the NIB work with Public Private Partnerships (PPPs)? The NIB will primarily lend to public entities to finance public infrastructure. In cases where infrastructure is privately owned or managed – like utilities, ports, or airports – the NIB will also provide financing. However, the NIB will not lend to privatize infrastructure that is currently publicly owned.

How will the NIB help small businesses? Small businesses will thrive. The 5% projected GDP growth will expand business for all. NIB projects will have a multiplier of 3, 5, 7, 10 times the investment, according to the historical record and recent studies done by the University of Maryland input-output model, and other economists. 

Who will manage the bank? The Bank will be run by a Board of Directors, 25 members, nominated by the President and approved by Congress. Half will be builders and engineers; others will be state and local officials, including county commissioners, bankers, minority and labor representatives. All must have long experience in building infrastructure. None will be political or titular appointments.

How does the NIB avoid risk and ensure its solvency? The NIB incorporates all of the normal fiduciary precautions of any lending bank: Risk and Loan managers, Full transparency. Audits. FDIC insured. Inspector General. Cost-benefit analysis ensures highest economic return. Loan officer monitoring ensures projects remain on time and on budget.

How will the NIB lower costs for infrastructure projects, which have risen dramatically in recent years? In several ways. The NIB will: promote better long-term planning by asking jurisdictions to fully inventory and prioritize infrastructure needs, and to consider how to bundle projects – underground utilities, stormwater, and road work, for example – to dig up roads only once. Also, standardization, and economies of scale will be promoted on project construction. And finally, the NIB will assist to rationalize and reduce costly regulations.

How does the NIB create and make money as it lends? Just like any commercial bank, the NIB creates money as it lends through the fractional reserve banking system: 90% of all U.S. money is created by commercial banks as they lend, and the NIB is no different. A preliminary forecast indicates that the NIB can live off of its net interest earnings, which will keep the bank’s finances in the black.

How will the NIB build and finance affordable housing? Our nation’s housing is in crisis, with too little construction to meet population growth, and massive increases in the cost of rental and privately owned homes. At the same time, budgeted funds to subsidize rental housing for low-income households are being cut back. The NIB will aim at filling the gap to finance construction of low-income affordable housing, while ensuring that public housing authorities are able to offer family units at affordable rates.

Will there be enough workers to build all of our nation’s infrastructure projects? While current unemployment is low, too many workers hold low-paying jobs, are not able to afford the areas where they live, and feel this economy is not working for them. NIB lending for public infrastructure will create up to 25 million great-paying jobs which low paid workers can transition into. The NIB will take an active role in getting new earn-while-you-learn training, provided by unions, businesses, and community colleges.

Is this socialism? Not any more than public schools, or interstate highways, or a national air traffic control system, or clean drinking water are socialistic systems. They simply provide needed public services which the private sector is not willing or able to provide. 

Is the NIB a Democratic idea? It is a nonpartisan, American idea. The First Bank of the United States was set up by George Washington and Alexander Hamilton, and approved by Congress; the second by James Madison, who initially opposed it, and then was built upon by his opponent John Quincy Adams; the next by Republican Abraham Lincoln, and the last by Republican Herbert Hoover, and then enhanced by Franklin Roosevelt. Infrastructure is inherently nonpartisan. Other countries around the world use this American idea of an off-budget financing institution – they have permanent national banks in place to finance their infrastructure.

If this was such a good idea why did these former banks end? Their charters were for 20 years. This NIB has no sunset clause. It is a permanent bank (just like FDIC and several other government financial corporations), and can be increased in lending size by an act of Congress if needed. 

How can you move this with the political gridlock? We are also approaching a potential economic crisis. The population is fed up with high prices and sitting in traffic. Great crises beget great change. The previous institutions were always created amidst great economic crises. This will be no different.