Reports of the death of Wall Street have been exagerated. The newest game in town is to get in on restructuring the American economy for the new age of Obama. First up on the agenda: find a “shovel ready” infrastructure project and start sifting through the soil for fees.
Take, for example, the plan to replace the Tappan Zee Bridge that crosses the Hudson from Westchester County, just north of New York City. Replacing the huge bridge–it’s very long because the river is pretty wide–will cost an estimated $16 billion.That’s more than half of the total amount appropriated in the stimulus bill for this kind of project, so New York can’t rely on Obamanomics to supply the money.
But where Obama fails, maybe Wall Street can help. Yesterday the state Department of Transportation announced it had hired Merrill Lynch to help put together the financing for the bridge.
OK. It’s not quite “shovel ready” since the plan to raise that money will not be completed until sometime in 2010, and construction obviously won’t start until after that. But this is about as close as you’re going to get with infrastructure. More importantly, the actual project doesn’t need to be shovel ready for it to be investment banking fee ready. New York has agreed to pay Merrill pay $2.2 million for the one-year contract.
Of course, that’s just for the advisory business. The project will likely be funded through bond sales, which will reap a new tranche of fees.
The project is actually a lot more than a bridge. It also includes a high-speed bus network (which, frankly, sounds terrifying–do you want to commute in a super fast bus?) across Rockland and Westchester and a new east-west commuter rail line from Suffern to Tarrytown.