U.S. Transit Agencies Ask Congress For Help in Averting Service Cuts
U.S. Transit Agencies Ask Congress For Help in Averting Service Cutshttp://www.washingtonpost.com/wp-dyn/content/article/2008/11/18/AR2008111803174.html?hpid=topnews
"Leaders of 11 transit agencies appealed to Congress yesterday for help in averting service cuts for millions of subway and bus riders across the country because of a financial emergency triggered by the global credit crisis.
Transit officials from New York, Boston, Washington, Los Angeles and Chicago were among those who gathered in Washington yesterday to lobby lawmakers and their staff. They warned that 31 of the country's largest transit systems, through no fault of their own, could face $2 billion in immediate payments in the coming weeks as hundreds of long-term financing deals with banks and other private investors collapse.
The deals are souring because they hinged on the credit rating of insurance titan American International Group and other insurers, which guaranteed the agreements. AIG's recent troubles put the deals into technical default, allowing banks and other investors to demand early termination fees and immediate payment from the transit agencies."
COMMENT
I am no attorney but the whole thing just seems fishy to me.
It looks like the transit agencies are looking for bailout costing American taxpayers 2 billions of dollars which should not happen.
First, AIG entered into illegal guarantees. They are an insurance company and the article used the word insurance, but it was not really insurance. If it was insurance there would be government oversight. AIG entered into guarantee contracts exceeding its capitalization with no regard whether or not there were any defaults. They hid the agreements from insurance regulators by not declaring the guarantees as insurance. It is suggested that these agreements be declared illegal and null and void and criminal. Those at AIG that formed these agreements should be declared felons and prosecuted.
"The transit deals in question were made from the late 1980s to 2003. Once common, they were outlawed by the Internal Revenue Service several years ago."
Second, it does not matter that AIG's credit rating declined. AIG was never able to pay the tens of billions of dollars they guaranteed not only to the transit agencies agreements but to many others. The transit agencies were making payments, so there was no default.
Third, it is in the public interest that the transit agencies not be subject to actions not due to their fault. AIG led the fraud and misrepresentation.
Fourth, it is in the public interest that the transit agencies not be hindered by actions not in there control especially while the banks are being paid on time.
Lets name a few people as felons and penalize them. AIG certainly does not deserve any fees that they were paid for the transit agency guarantees. AIG should also be penalized. Some executives also need fines and at least long probation times. And the public does not deserve to pay anyone in this case.
posted by God Bless America - Bob @ 3:59 PM
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