With new financing infrastructure forming around state- and local-government codified banks, Community Development Finance Institutions, and other non-profits as envisioned by the Biden Administration, key issues still need resolution before successfully deploying taxpayer dollars. If the Inflation Reduction Act is to generate the trillions required to curb this nation’s greenhouse gas emissions, there needs to be some guardrails put in place sooner than later.

A failure to do this will result in a $27 billion boondoggle. Many of the new banks and CDFIs that have come into existence in the last three years do not have experience in participating in larger capital market systems. This inexperience coupled with the growth of so-called service providers, advisors and GovTech solution firms for all your GGRF-related concerns may very well be barbarians at the gates. The fast deployment schedule and the politics of this program will make for mistakes.

A reflection onto the how the basic tents of the modern U.S. mortgage system could be accretive to the way in which this new green ecosystem exists teases out a variety of lessons for those actively engaging in the moving parts of the roll-out of Greenhouse Gas Reduction Fund as well as for any stakeholders in the functioning capital markets in the country.

This is an area CSG will be writing on with more frequency in coming months as we see this ecosystem having the potential to adjust the many ways within which public finance functions in this country.