Build America Bonds — Promises Made, Promises Broken

March 1, 2013 — The Build America Bond (BAB) program, established under the American Recovery and Reinvestment Act in 2009, was touted by the Obama Administration as a more efficient way for municipal issuers to sell bonds to the public, while maintaining revenue neutrality for the Federal government’s balance sheet. The proponents of this program claimed BABs to be a new era in municipal finance that would lower borrowing costs and increase demand for municipal bonds. With the expiration of the program at the end of 2010, a total of $182 billion of BABs where issued, all of which were structured as direct-pay. In an effort to restart this program, President Obama is proposing a similar plan called “America Fast Forward” which would provide a reduced interest rate subsidy of 28%.