| On Thursday I profiled Mort Downey, a well-regarded transportation expert, as a "quiet name" - an influential decisionmaker who operates behind the scenes, out of the public spotlight. Downey's work in the for-profit world - as president and now chairman of PB Consult, a division of engineering giant Parsons Brinckerhoff - has established him as a cheerleader for infrastructure privatization. His decades of work in the public sector give him that much more cred as an industry spokesperson.
The two other leads on the DoT review team were Jane Garvey, former FAA chief, and Michael Huerta, a former DoT official.
As of last May, Garvey is head of public-private partnerships (aphorism for infrastructure privatization) at JP Morgan. The hire garnered quite a bit of press attention, including a writeup in DealBook, the New York Times' Wall Street blog, which observed: "it marks only the latest high-profile hire amid sharply climbing interest in infrastructure investing, which involves toll roads, airports and the like."
From the internal memo announcing Garvey's arrival, published on DealBook:
Today is an exciting day for JPMorgan's Infrastructure Advisory Group. In addition to our advisory and financing role on the $12.8 billion Pennsylvania Turnpike concession, I'm pleased to announce that Jane Garvey has joined JPMorgan's as head of U.S. Public Private Partnerships in Transportation, reporting to me. In this role, Jane will advise clients in the transportation sector on how traditional infrastructure financing methods can be improved to facilitate much needed project delivery for governments. As federal funding disappears and state and local fiscal positions weaken, public private partnerships are increasingly used as a tool for delivering much needed projects.
Nowadays, many economists believe that the government needs to make significant investments in infrastructure in order to get the economy back on track. Wall Street, on the other hand, clearly has a lot riding on the continued erosion of federal funding for infrastructure.
So it would be no suprise if people like Garvey, who has been hired by a Wall Street bank, opposed funding increases for infrastructure, whether it be part of the stimulus package or the upcoming transportation bill. She stands to gain lots of money, probably millions, as infrastructure privatization continues. Why should we believe that she's working for the public interest, and not Wall Street interests/gross self-interest?
Michael Huerta, the third and final team lead on Obama's DoT review, is another very well-respected transportation expert with loads of public sector experience. But like Downey and Garvey, his most recent work has been in the private sector, for ACS, a Fortune 500 company that specializes in business process outsourcing.
The division Huerta heads up, ACS Transportation Solutions, is a member of the National Council for Public-Private Partnerships, like Downey's PB Consult. When a state or local government outsources the management of a toll road, Huerta's ACS often steps in. It's not hard to imagine that Huerta stands to gain substantially from privatization. But we don't have to imagine it. He says so right here, in this ACS investor call from May 15, 2008 (not available online, published on the Voxant FD Wire):
So what is driving our past growth in the future? Well, you are seeing a lot more privatization here in the U.S. and abroad as public authorities, governments look to get more efficiency out of the transportation system, that trend is very good for us.
So privatization is very good for Michael Huerta. And Jane Garvey. And Mort Downey. Every single Obama DoT review member is a privatization advocate, despite the fact that the American public overwhelmingly supports public investment in transportation infrastructure (regardless of political affiliation), despite the fact that this is an extremely controversial issue, despite the fact that this was supposed to be Bush's agenda, not Obama's.
The transition selections matter because Obama transition review teams were charged with significant personnel and policy decisions at their respective agencies. The DoT review team's leadership suggests that the Obama DoT will be chock full of privatization advocates and pushovers, and will embrace policies that favor Wall Street interests. The LaHood pick is a good example of how this will play out, but I suspect there are and will be others.
The fact that this hasn't gotten much attention demonstrates the dangers of the revolving door: Huerta, Downey, and Garvey have leveraged years of public sector experience for private interests and (exorbitant) personal gain, but because of their public service and their status as experts, no one questions their motivations.
And quietly, through the classic process of regulatory capture, Wall Street has positioned itself to shape and control the future of American transportation infrastructure. Who knows if they will be successful, but if highways are anything like houses, it certainly is a scary prospect.
Originally published in Eyes on the Ties (the LittleSis blog). |
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