House speaker sees infrastructure bank as option

By Joan Gralla

NEW YORK (Reuters) - A top Democrat in the U.S. Congress raised the possibility on Friday of creating a federal infrastructure bank to help pay for roads, subways and other projects that could create jobs and improve the environment.

The new debt-selling bank would be an independent federal entity that would evaluate major projects and use various financial tools to fund them, explained House of Representatives Speaker Nancy Pelosi of California.

"With the economy slowing down and job losses accelerating, we must look for opportunities to take advantage of the stimulative effect of investing in infrastructure," Pelosi said in a speech prepared for delivery to the Regional Plan Association, a think tank.

The new bank could sell 50-year debt, perhaps to pensions, she said, suggesting current investment curbs might be eased.

Improving roads and public transit would cut reliance on imported oil, Pelosi said, noting 90 percent of this fuel is burned for transportation.

Pelosi raised the idea of a cap-and-trade system for greenhouse gas permits that could raise money for mass transit or other infrastructure needs, but she provided no details.

She vowed to explore these "innovative" approaches in Congress, where Democrats think more should be done to stimulate a lagging U.S. economy. President George W. Bush wants to first see the impact of a $168 billion economic stimulus law enacted in February.

Pelosi told her audience: "I believe that if there were one item in the stimulus package -- if the President said, 'Just pick one and we'll go whole hog on it,' it should be infrastructure." She added the investments should be "substantial."