It hasn't happened yet, but if it does, the agency would have no choice but to slash service drastically. It could also hit BART, Muni, WMATA, and the CTA though there was no hint AIG was involved in those as well.Things started to go downhill when AIG ran short of cash after running up billions in losses tied to the housing slump. Its credit ratings were slashed and the firm was on the verge of collapse last month when it was bailed out by the federal government.
The lower credit ratings triggered a clause in the lease-back agreements that require the MTA to either find a new firm to guarantee the deals, or reimburse investors for their down payments and lost tax benefits, — a scenario that could cost the transit agency between $100 million and $300 million.
Many of the nation’s largest transit agencies participated in such deals. Among them are the San Francisco Muni system, the BART rail system in the Bay Area, the Chicago Transit Authority and the Washington, D.C., Metro system.
4 comments:
Wow..
I read about this on MassTransit, and I couldn't believe that agencies had to resort to buying, selling, and then leasing back their assets just to make money! Insane. Truly Insane.
That's why they should have let the banks fail and put 700 billion into real infrastructure and social capital. The economy runs from the bottom up, not top down. But no, we will have to have a depression before common sense will prevail.
we've made our government and the public good a slave to corporate america again. why do government agencies always come out on the wrong side of these deals?
If you think about it, by the way, this sort of deal is just a natural extension of the thinking you complained about two posts ago. There's a a big up front benefit, and who cares about the ongoing cost. As for risk, what's that? I think the whole privatization of roads idea is much the same too.
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