"Trannie Mae" and Special Interests | Randal O'Toole | Cato Institute: Commentary

"Trannie Mae" and Special Interests | Randal O'Toole | Cato Institute: Commentary: "A real bank lends money for projects that are likely to cover their costs and repay the loans. Many of the projects Mr. Obama wants the new 'bank' to fund, including high-speed rail and rail transit, will not see a single dime; they won't cover their operating costs, much less the capital costs of the projects. So much of Trannie Mae's money will have to be in the form of grants, not loans."

"For example, the Federal Transit Administration's (FTA) New Starts program gives out billions of dollars each year to rail-transit projects using supposedly clear, analytical criteria. Those criteria include 'cost effectiveness' and 'mobility improvement' ratings. However, the FTA does not require transit agencies to compare the added efficiency of rail transit with alternatives, such as bus-rapid transit or simply building new highway lanes.

As a result, decisions about New Starts funding are highly subjective and subject to meddling by lawmakers. If powerful members of Congress find that a favored project is rated low by one or more criteria, they simply exempt the project from those criteria."