A bipartisan group of House members has introduced legislation that would completely reshape the financial structure of the American maritime industry and supplant a discredited system of federal subsidies that has existed for nearly half a century.
The bill, which appears to have a good chance of House passage and at least some support in the Senate, would be the most sweeping revision of merchant marine law since 1936.
It would create a U.S. Maritime Redevelopment Bank with broad powers to finance and insure ship construction, issue securities backed by ship mortgages, serve as an intermediary between the industry and the private financial markets, and invest in ship construction as an equity partner.
The bill's chief sponsor, Rep. Mario Biaggi (D-N.Y.), chairman of the merchant marine subcommittee of the Merchant Marine & Fisheries Committee, said the bank would restore market discipline of an industry long dependent on federal subsidies, which have left "a legacy of a failed policy, a foundering merchant marine, and an ever-widening gap between U.S. and foreign productivity and competitiveness in maritime enterprise."
Among the other sponsors are Merchant Marine Chairman Rep. Walter Jones (D-N.C.), Rep. Edwin B. Forsythe (R-N.J.), the ranking Republican on the subcommittee, and Rep. Lindy Boggs (D-La.), principal sponsor of a controversial measure that seeks to bolster the merchant marine by requiring a rising percentage of bulk cargoes such as oil and grain to be carried on U.S.-registered vessels.
Under Biaggi's bill, the Maritime Redevelopment Bank would have a standing $2 billion line of credit with an agency of the Treasury, and a separate $2 billion in loan-insurance authority. It also would have broad powers to participate in foreign syndication of maritime loans and to issue mortgage-backed securities like those of the Federal National Mortgage Association.
Under current law, the federal government subsidizes both the construction and the operation of U.S.-built, U.S.-registered merchant vessels, but the size of the U.S. fleet has dwindled anyway because of lower-cost foreign competition. The Reagan administration has eliminated construction subsidies and cut back on operating subsidy commitments. The Biaggi bill represents a tacit admission by the industry's friends in Congress that the subsidy program has outlived its usefulness and is unlikely to be revived.