By David Bauer, senior vice president of government relations, ARTBA
The banking industry is suing the federal government over a provision in the 2015 FAST Act surface transportation reauthorization law that reduces the dividend large banks receive from being part of the Federal Reserve System.
To stabilize the Highway Trust Fund (HTF) and support modest increases in highway and public transportation investment, Congress included a number of provisions in the FAST Act to transfer $70 billion from other parts of the federal budget to the HTF. One of these provisions reduced the annual dividend banks with more than $10 billion deposited in the Federal Reserve System receive from 6 percent to less than 2 percent. This action represents a breach of contract, the American Bankers Association and Washington Federal—a Seattle, Washington-based bank holding company—claim in their Feb. 9 lawsuit.
“The FAST Act set a troubling precedent to target specific segments of the business community to meet broad obligations like highway infrastructure. Every industry in this country is vulnerable if this is allowed to stand,” the bankers’ association said in a press release.
If successful, the lawsuit would not change the HTF’s revenue outlook as the $70 billion in transfers went into effect with the FAST Act’s enactment. Any reinstated or restored interest payments to large banks would come out of the federal general fund and, in effect, make a portion of the FAST Act’s investments add to the federal debt.
Congress has transferred $143 billion into the HTF since 2008. To fund President Donald Trump’s ambitious infrastructure package, some in the House, Senate and administration are discussing further new taxes unrelated to system use.
The bankers’ lawsuit is the latest demonstration of the flaw in continued congressional budget gimmicks and practices that “rob Peter to pay Paul” to support needed infrastructure investments. ARTBA is pushing Congress and the Trump administration to ensure a permanent and growing HTF revenue solution is the foundation of any infrastructure investment measure.