Here’s a quick picture about where all this focus on the WIFIA Loan Program is going:

Why? Because delayed investment in US basic infrastructure is actually a gigantic state & local liability, on top of all the others. It’s a type of expensive and dangerous off-balance sheet debt that needs to be refinanced on-balance sheet as quickly, cheaply and efficiently as possible. Covid-19 just makes everything worse — the kicked can is hitting the wall.

Solutions? Not P3s or private equity. Not project financing. Not magic unicorn technology. Probably not giant federal grant transfers either, but if that happens it will come with its own set of serious economic and jurisdictional problems — there’s no free lunch.

Instead, the Fed’s MLF shows a realistic path. Washington recognizes the problem and although big-scale infrastructure funding is mostly talk, they are in fact willing to deliver big-scale financing. The WIFIA program is effectively a prototype that shows how this is efficiently done for long-term infrastructure loans, basically as an extender to muni bonds. Putting parts of the two together in scale and for a broad range of municipal infrastructure is the basis of something that’s big, simple and cheap enough to actually work. That’s the point.