National Infrastructure Bank Act of 2025
- Sponsor
- Rep. Davis, Danny K. [D-IL-7]
- Committees
- Natural Resources Committee (primary)
- Last action
- Sep 15, 2025
Bottom line
The bill proposes to create a new, massive federal financial institution to independently fund a broad spectrum of infrastructure projects nationwide, leveraging private capital and federal backing to close a significant financing gap.
What it actually does
This bill establishes a National Infrastructure Bank as a mixed-ownership Government corporation with the authority to provide up to $5 trillion in direct loans and blended financing for a wide range of infrastructure projects across the United States. It aims to capitalize the Bank through a combination of existing Treasury securities, municipal bonds, cash investments, and a $100 billion on-call subscription from the U.S. Treasury, while claiming to operate without requiring additional federal taxes or deficits. The Bank is designed to address a multi-trillion-dollar infrastructure financing gap, stimulate economic growth, create jobs, and improve productivity, with specific provisions for disadvantaged communities and labor standards.
Proponents argue
Supporters argue that a National Infrastructure Bank is essential to close the estimated $3.689 trillion infrastructure financing gap, stimulate robust economic growth, create high-wage jobs, and significantly improve national productivity, drawing on historical precedents of successful national banks like the Reconstruction Finance Corporation. They contend that this model can achieve these ambitious goals without increasing federal taxes or deficits by strategically leveraging existing Treasury securities and attracting substantial private investment through attractive, tax-exempt preferred stock dividends.
Opponents contend
While the bill has many cosponsors, potential opponents might raise significant concerns about the unprecedented scale of the proposed bank's lending authority ($5 trillion) and the potential for moral hazard given the explicit full faith and credit backing of the U.S. government for losses. Critics could also question the claim of 'no new taxes or deficits,' arguing that the substantial contingent liability and the use of Treasury securities still represent a significant federal commitment and potential future taxpayer burden. Concerns may also be voiced regarding the extensive federal involvement in project selection and the potential for market distortion or political influence over such a large financial entity.
The bill is moderately long and contains complex financial mechanisms, governance structures, and detailed eligibility criteria, requiring dedicated time for an informed reader to fully understand its implications.
Title I, Sec. 101
Tax Exemption for the National Infrastructure Bank
This provision amends the Internal Revenue Code to classify the newly established National Infrastructure Bank as a Government corporation that is exempt from federal income tax. This means the Bank will not pay federal taxes on its earnings, allowing it to retain more capital for its operations and infrastructure investments.
Supporters argue
Supporters argue that exempting the Bank from federal income tax is crucial for its operational efficiency and financial strength. This allows the Bank to maximize its capital for reinvestment into critical infrastructure projects, ensuring that its earnings directly contribute to its public mission rather than being diminished by taxation.
Critics contend
Critics might argue that exempting a large financial institution, even a government-owned one, from federal taxes could be seen as an indirect subsidy or create an uneven playing field with private financial institutions that do pay taxes, potentially leading to revenue losses for the federal government.
Tradeoffs
This provision balances the desire for the Bank to maximize its financial capacity for infrastructure investment against potential concerns about tax fairness and the perception of an indirect federal subsidy.
Title I, Sec. 102
Charitable Contribution Status for Contributions to the Bank
This provision amends the Internal Revenue Code to allow contributions made to the National Infrastructure Bank to be treated as tax-deductible charitable contributions. This means individuals and entities donating to the Bank can claim these contributions for tax purposes, subject to existing percentage limitations for charitable giving.
Title I, Sec. 103
Tax Exemption for Preferred Dividends of the Bank
This provision amends the Internal Revenue Code to exclude dividends received on preferred stock of the National Infrastructure Bank from gross income. This makes these dividends tax-exempt for shareholders, significantly increasing the effective return on investment for those who purchase the Bank's preferred stock.
Title II, Sec. 202
Establishment of the National Infrastructure Bank
This section formally establishes the National Infrastructure Bank as a mixed-ownership Government corporation. It specifies that the Bank will operate under chapter 91 of title 31, United States Code (governing government corporations), and that this Act serves as its official charter. The Secretary of the Treasury is tasked with assisting in its establishment.
Title II, Sec. 203(b)
Bank Capitalization and Limitations
This section authorizes the Bank to raise up to $500 billion in capital stock, which will be held in the form of Treasury securities. This capital can be subscribed by public holders of existing Treasury or municipal bonds (exchanged for stock), cash payments, and an on-call subscription of up to $100 billion from the U.S. Treasury in 30-year bonds. The Bank must maintain a 10% risk-based capital ratio, and its capital accumulation is phased in over five years, with Federal Reserve assessments at each stage.
Title II, Sec. 203(f)
Lending Authority and Limit
This section authorizes the Bank to provide direct loans and engage in blended financing for a wide array of infrastructure projects, with a total lending limit of $5 trillion. Loan maturities are designed to match the profitability and useful life of the projects. The Bank will charge fixed, risk-based interest rates, considering factors like Treasury rates, borrower credit ratings, economic conditions, and whether the borrower is a disadvantaged community (with potential interest rate subsidies).
Title II, Sec. 203(h)
Use of Net Earnings and Trust Fund for Disadvantaged Communities
After meeting its current obligations and setting aside funds for loan losses, the Bank is authorized to use its net earnings. A portion of these earnings will be paid as annual dividends to the U.S. Treasury, with the amount determined by the Board. Any remaining net earnings will be deposited into a dedicated trust fund. This trust fund's purpose is to subsidize loans for infrastructure projects in disadvantaged communities that may not be able to repay loans under normal terms. Direct federal contributions can also be added to this trust fund.
Title II, Sec. 204
Formation of Regional Economic Accelerator Planning Groups
This section mandates the Bank to facilitate the organization of at least seven regional economic accelerator planning groups. These groups, composed of state and local public sector officials, will identify economic megaregions, assess infrastructure needs and priorities, develop regional infrastructure development plans, and define how projects will contribute to energy savings, environmental improvements, job creation, economic growth, and tax income. They will also identify ways to streamline laws and assist entities in formulating project proposals for Bank financing.
Title II, Sec. 205
Project Eligibility and Evaluation Criteria
This section outlines the criteria for infrastructure projects to receive financial assistance from the Bank. Projects must have local, regional, or national significance, be in the public interest, and align with regional development plans. The Bank will evaluate applications based on factors such as economic growth, job creation (including fair employment and workforce development), environmental and public health benefits, applicant's project management ability, use of innovative technologies, preservation of existing infrastructure, and promotion of domestic production of construction inputs. Specific categorical benefits are defined for transportation, environmental, energy, telecommunications, and community development projects. The Bank is also mandated to act as a 'lender of last resort' for projects in high unemployment or disadvantaged communities.
Title II, Sec. 205(e) and (f)
Prohibitions on Privatization and Employee Protections
This section includes two key exclusions. First, the Bank is prohibited from providing financial assistance for any infrastructure project that would subsidize or encourage the sale, lease, or private control/operation of infrastructure currently owned or controlled by public entities. Second, for projects involving reconstruction, rehabilitation, replacement, or expansion that might affect current employees, the applicant must certify compliance with employee protection requirements (as outlined in Sec. 213) before receiving financial assistance.
Title II, Sec. 213
Labor, Sourcing, and Equity Requirements for Projects
This comprehensive section mandates that all Bank-funded infrastructure projects must comply with several federal and state laws and policies. These include the Davis-Bacon Act (requiring prevailing wages), Project Labor Agreements (mandatory in 'covered states,' voluntary elsewhere), Buy America requirements (for domestic sourcing), and various nondiscrimination laws (Age, Disability, Sex, Civil Rights Act). It also sets a goal for not less than 10% participation by Minority, Women, and Disadvantaged Business Enterprises (M/W/DBE) and requires recipients to implement local, rural, or geographic hiring preferences, prioritizing individuals with barriers to employment, veterans, and underrepresented populations.
This subsection stipulates that any losses incurred by the Bank on its loans, loan guarantees, insurance, or for capital investment and dividend payments that exceed its established loan-loss provisions shall be borne by the Secretary of the Treasury. This constitutes a contingent obligation backed by the full faith and credit of the United States Government.
Title II, Sec. 203(i)
Why it matters:While defining liabilities within financial authorization sections is standard legislative practice, its placement within a dense section might obscure the direct federal backing of the Bank's potential losses, which is a significant fiscal commitment.
Case for: Proponents argue this provision is essential to establish the Bank's credibility and attract investors and borrowers. The full faith and credit backing provides ultimate security, making the Bank's financial instruments highly reliable and enabling it to undertake large-scale, long-term projects with confidence.
Case against: Critics contend this represents a significant, open-ended contingent liability for U.S. taxpayers, potentially exposing the federal government to substantial financial risk if the Bank's massive loan portfolio performs poorly. They argue it undermines the bill's claim of 'no new taxes or deficits' by creating a hidden, potentially enormous, future obligation.
Estimated impact: Potentially trillions of dollars in contingent liability, depending on the scale of Bank operations and the performance of its loan portfolio over decades.
This section exempts the National Infrastructure Bank from two key federal laws: Section 504(b) of the Federal Credit Reform Act of 1990, meaning no budget authority is required for the Bank's contracts or loans, and Section 3713 of title 31, United States Code, which typically grants federal claims priority in insolvency proceedings.
Title II, Sec. 214
Why it matters:The use of technical legislative language is common for such exemptions. However, the exemption from the Federal Credit Reform Act is particularly significant as it allows the Bank's massive lending activities to operate outside traditional federal budgetary scoring, which could be seen as intentionally obscuring its fiscal impact.
Case for: Proponents argue these exemptions are critical to allow the Bank to operate with the necessary flexibility and speed, unencumbered by standard federal budgetary scoring rules that can hinder long-term infrastructure financing. They contend it enables the Bank to function more like a commercial bank, focusing on project viability rather than annual appropriations cycles.
Case against: Critics would argue that exempting the Bank from the Federal Credit Reform Act allows its massive lending activities to bypass crucial congressional oversight and budgetary scrutiny, potentially obscuring the true fiscal impact and creating a 'shadow budget.' The lack of federal claim priority might also be questioned as it could affect the recovery of funds in case of borrower default.
Estimated impact: Enables the Bank to make up to $5 trillion in loans without direct appropriations or traditional budget scoring, significantly altering federal fiscal transparency for this entity and potentially shifting how large-scale federal financial commitments are accounted for.
This subsection details a phased approach to the Bank's capital stock accumulation, limiting it to no more than $150 billion by the end of its first full fiscal year, $300 billion by the third, and $500 billion by the fifth. After each of these periods, the Board of Governors of the Federal Reserve System is mandated to conduct an assessment of the Bank's operations and report its findings and recommendations to Congress and the Bank's Board.
Title II, Sec. 203(b)(5)
Why it matters:This is standard practice for detailing operational constraints and oversight mechanisms within a financial institution's charter. While important for governance, it's a technical detail within a larger financial framework.
Case for: Proponents argue this phased approach allows for careful, controlled growth of the Bank and provides crucial external oversight from the Federal Reserve. This ensures the Bank's operations are sound, responsive to recommendations, and can adapt before it reaches its full capitalization, promoting stability and accountability.
Case against: Critics might argue that the Federal Reserve's role is limited to 'assessments' and 'reports,' which may not provide sufficient real-time oversight or control over the Bank's potentially rapid expansion and lending decisions. The phase-in limits might also be seen as arbitrary or potentially delaying urgent infrastructure investments.
Estimated impact: Establishes a structured growth path for the Bank's capital over five years and introduces a periodic, high-level external review mechanism from the Federal Reserve, influencing the Bank's operational development and strategic direction.