Proposed Infrastructure Bank Aims for $5 Trillion in Loans: Mandates Prevailing Wages and Union Agreements

If you’ve heard the term “infrastructure gap,” it means the U.S. needs trillions of dollars just to keep the lights on and the roads paved. The National Infrastructure Bank Act of 2025 is the proposed solution: a new, federally backed financial institution designed to close that gap by mobilizing massive amounts of capital. The bill creates a National Infrastructure Bank (NIB), a mixed-ownership government corporation authorized to raise up to $500 billion in capital and issue up to $5 trillion in loans for projects ranging from high-speed rail and broadband to affordable housing and clean water systems. This isn’t a standard government handout; the NIB is designed to operate like a bank, issuing loans at fixed rates based on risk and a floor rate tied to the 30-year Treasury bond or 1.6 percent, whichever is higher (Sec. 203).

The $500 Billion Capital Raise: How Wall Street Meets Main Street

The NIB is structured to avoid adding to the federal deficit by raising its capital privately, primarily by allowing investors to swap existing long-term Treasury securities or municipal bonds for non-voting preferred stock in the Bank. The U.S. Treasury, however, acts as a backstop, offering up to $100 billion in 30-year Treasury bonds to guarantee the Bank’s initial stability (Sec. 203). For those who buy this preferred stock, the dividends they receive are excludible from gross income for tax purposes (Sec. 103). This is a huge tax incentive designed to lure in large institutional investors, like pension funds, who are looking for stable, tax-advantaged returns. Essentially, the Bank is using tax breaks and federal backing to unlock trillions for construction, rather than relying on new taxes.

The Rules of the Road: Prevailing Wages and Union Requirements

This bill comes with strict requirements for anyone who wants a loan. For construction workers, this means a guaranteed win: all projects funded by the NIB must pay workers the prevailing wage as determined by the Secretary of Labor (Sec. 213). For contractors, the rules get even tighter. In any state where the NIB funds at least $35 million in construction contracts, or where state law already allows it, the project must use a Project Labor Agreement (PLA). A PLA is essentially a pre-hire collective bargaining agreement with a union. This mandate, while ensuring high labor standards and training, could significantly restrict non-union contractors from bidding on these massive infrastructure projects in those “covered States” (Sec. 213).

Who Gets the Loans and Why

The NIB isn't just funding projects; it’s funding projects that meet specific social and economic goals. The Board of Directors, a 25-member body with mandated representation from labor unions, engineering, and finance, will use strict criteria to select projects (Sec. 206). Projects must demonstrate high economic benefits, job creation with workforce training, and adherence to Buy America requirements (Sec. 205). The Bank is specifically tasked with being a “lender of last resort,” prioritizing loans to projects in disadvantaged communities or areas with high unemployment, especially if those projects can’t get reasonable financing elsewhere (Sec. 205). To help these communities, the Bank will establish a trust fund, subsidized by its net earnings, to offer lower interest rates to eligible borrowers (Sec. 203).

The Fine Print: Oversight and Contingent Liability

For the busy taxpayer, there are two key things to know about the fine print. First, the bill creates a Special Inspector General (SIG) whose sole job is to audit and investigate the Bank’s operations (Sec. 212). This is a crucial layer of oversight for an entity handling trillions. Second, while the Bank aims to be self-sustaining, if it suffers losses on loans that exceed its internal loss provisions, the Secretary of the Treasury covers the excess, which is considered a contingent obligation backed by the full faith and credit of the U.S. Government (Sec. 203). In plain language: if the Bank makes terrible loans that go unpaid, the American taxpayer is ultimately on the hook. However, the Bank is exempted from the federal government’s usual priority in debt collection, meaning if a borrower defaults, the Bank is treated like any other creditor, not given special treatment (Sec. 214).

Finally, the Bank has an emergency clause. For a limited time, until it has loaned out $500 billion, the Board can temporarily skip some normal selection rules to fast-track critical, shovel-ready projects or those that reduce unemployment (Sec. 205). This gives the NIB significant power to inject cash quickly, but it also means a portion of the initial lending might bypass the rigorous review processes intended for long-term stability.