Smith Presses FTA Nominee About Trump’s Push To Cancel Authorized Infrastructure Project Funding

2 days ago

During a Senate Banking Committee hearing last week, Sen. Tina Smith (D-MN) asked the FTA Administrator Nominee former Rep. Marcus Molinaro (R-NY) about cuts to government projects that were already in motion.

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Transcript

00:00Thank you for being here.

00:07I will follow-up on the question that my colleague Senator Britt asked about rural transit.

00:13You and I spoke about this yesterday afternoon.

00:17I appreciate that question.

00:19The FDA is responsible for lots of grants and projects that are already in the pipeline.

00:26Things are already happening.

00:28Workers have ordered materials, construction is in process, we have engineers and electricians

00:32and the whole nine yards showing up to work.

00:36My question is concern about what the administration has been doing to pause or halt or sometimes

00:42cancel projects, even projects that are across other agencies that are already in process.

00:49Can you talk about how you would approach this leading FDA and are you able to commit

00:54that the funds that we authorize through the Infrastructure and Jobs Act, that those

01:02projects will keep moving and the funds keep flowing?

01:04First, Senator, thank you for the time yesterday.

01:07I hope Graham had a whirlwind of a day shadowing you.

01:12As I said yesterday, I don't know the status of the individual grants, but it is my commitment

01:16as the President has asked and Secretary Duffy expects, I will continue to advocate for the

01:22release of dollars and certainly meeting the contractual obligations of the FDA.

01:28As I noted a few moments ago, I read yesterday and this is the only information I have, public

01:32notice that some of those grant projects are now moving forward.

01:36I believe congressionally directed dollars are starting to flow.

01:41My commitment to you is to work with you and your team to advocate for and hopefully move

01:46effectively those dollars.

01:49It is critically important, and I understand the reality, that in order to move massive

01:54infrastructure projects and even small transit projects, that commitment from appropriation

02:00to ultimate obligation and contract is important to adhere to.

02:04That's right.

02:05I think that's important.

02:07Of course, at the end of the day, if you have small rural transit agencies that are in the

02:11midst of a project and then that project gets held up because the federal government isn't

02:15living up to its commitments, then that's just money out of the pockets of my constituents

02:18who are going to have to figure out how to cover the costs other ways.

02:21For Minnesota, of course, we send more money to the federal government than we get back,

02:25so this is a matter of great interest.

02:28I appreciate the conversation we had yesterday.

02:32Mr. Atkins, I want to talk to you about private funds.

02:36There's growing evidence that private fund managers are taking advantage of their unregulated,

02:40unregistered status, pardon me, unregistered status.

02:43In 2022, the SEC warned that managers are not disclosing the full fees and expenses

02:48that their investors are paying and are using cherry-picked track records to artificially

02:53inflate their funds' performance.

02:54In December, the Wall Street Journal reported that private markets, as a quote, come at

03:00the cost of higher fees, greater risk, more conflicts of interest, and less disclosure.

03:05That matters because it means that workers' pension plans or retirement accounts get saddled

03:09with those higher fees.

03:10Mr. Atkins, do you agree that private fund managers are charging higher fees and expenses

03:16to their investors than their public market counterparts?

03:19Well, Senator, there's a whole range of fees that are done, but I would, to your point

03:26there, as far as, you know, the not being truthful in disclosure, 10B applies to whether

03:34it's a public or private security.

03:37So that, I think, is one way to protect investors.

03:44If there be, you know, any, you know, bad disclosure in that way.

03:52So you're saying that investors should be protected by making sure that they know what

03:55those fees are going to be in advance?

03:57Well, these are, you know, accredited investors and people who are, you know, not retail investors,

04:06and so they have the means to do investigation.

04:10But if they are, if the disclosures are incorrect, then that's, or materially incorrect, then

04:17that's actionable.

04:19So the typical management fee for a private fund can be four times higher than the annual

04:23fee for a mutual fund, and that doesn't even include the profits, of course, that those

04:27fund managers keep for themselves, which can push up to 20%.

04:32And multiple studies have found that private funds rarely, barely, I should say, beat the

04:38stock market if they do at all.

04:40Do you think that private fund managers, I mean, what's your take on what we ought

04:45to be, you know, doing to make sure that this is fair for people?

04:48Well, I think people who are investing in these sorts of funds, you know, are more sophisticated

04:55in general than others, or they have the will, they have the ability to hire advisors.

05:00And so they don't need to pay, there's like other alternatives.

05:04You don't necessarily need to invest in those types of instruments.

05:10I think this is a matter of concern, and I think that as these funds become, you know,

05:16it's the pensions of my constituents that are in these funds, and it's not a good thing.

05:23Well, I'm happy to work with you on that.

05:26Senator Warnock.

Smith Presses FTA Nominee About Trump’s Push To Cancel Authorized Infrastructure Project Funding

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