dcrider
November 1st, 2008, 12:12 AM
With AIG's recent collapse in the financial crisis...
A belgian bank has given metro 10 days to pay up the $43 million it owes them. Metro has until November 12, 2008 to pay up.
If the cash isn't raised by then, who knows what will happen?
I'm sure the government will cough up the dough in the form of higher inflation or taxes for us common folks.
Had this agreement not been reached today, Metro would have been forced to hand over seventeen million dollars today to the bank immediately. Money it owes this bank.
Metro has 14 other financing deals with banks that could go into default. Officials said it would cost $50 million to $100 million to purchase the additional insurance to replace AIG as guarantor.
Transit officials and members of Congress are asking for Treasury's help. They note that while Treasury is working to prop up large banks with taxpayer money, some of those banks are trying to profit on the backs of public transit agencies. Bank of America and Wells Fargo were involved in similar deals with Los Angeles's transit system.
If Metro loses its case Nov. 12, the agency could be forced to immediately slash more than $25 million from its capital budget. That would mean less money for much-needed capital projects, including overhauling escalators, fixing tunnel leaks, upgrading train communication equipment and buying buses.
Metro estimates that it could pay as much as $435 million to banks if its other agreements go into default.
Members of Congress say the potential for damage is even broader. The more than two dozen other transit agencies that have similar financing agreements stand to lose $1.5 billion to $4 billion.
Metro says it has been making its regular lease payments to KBC and therefore should not have to make the additional payment. Two banks have agreed to terminate the deals with either no payment or minimal payment from Metro.
Transit agencies, which don't pay federal taxes, would sell their rail cars and other equipment to banks and receive large amounts of money upfront for capital improvements. The banks were able to shelter their income while "their" rail cars depreciated. The transit agencies leased back the cars from the banks at a discount that split the value of the tax break with the bank.
Source (http://www.washingtonpost.com/wp-dyn/content/article/2008/10/30/AR2008103004223.html)
A belgian bank has given metro 10 days to pay up the $43 million it owes them. Metro has until November 12, 2008 to pay up.
If the cash isn't raised by then, who knows what will happen?
I'm sure the government will cough up the dough in the form of higher inflation or taxes for us common folks.
Had this agreement not been reached today, Metro would have been forced to hand over seventeen million dollars today to the bank immediately. Money it owes this bank.
Metro has 14 other financing deals with banks that could go into default. Officials said it would cost $50 million to $100 million to purchase the additional insurance to replace AIG as guarantor.
Transit officials and members of Congress are asking for Treasury's help. They note that while Treasury is working to prop up large banks with taxpayer money, some of those banks are trying to profit on the backs of public transit agencies. Bank of America and Wells Fargo were involved in similar deals with Los Angeles's transit system.
If Metro loses its case Nov. 12, the agency could be forced to immediately slash more than $25 million from its capital budget. That would mean less money for much-needed capital projects, including overhauling escalators, fixing tunnel leaks, upgrading train communication equipment and buying buses.
Metro estimates that it could pay as much as $435 million to banks if its other agreements go into default.
Members of Congress say the potential for damage is even broader. The more than two dozen other transit agencies that have similar financing agreements stand to lose $1.5 billion to $4 billion.
Metro says it has been making its regular lease payments to KBC and therefore should not have to make the additional payment. Two banks have agreed to terminate the deals with either no payment or minimal payment from Metro.
Transit agencies, which don't pay federal taxes, would sell their rail cars and other equipment to banks and receive large amounts of money upfront for capital improvements. The banks were able to shelter their income while "their" rail cars depreciated. The transit agencies leased back the cars from the banks at a discount that split the value of the tax break with the bank.
Source (http://www.washingtonpost.com/wp-dyn/content/article/2008/10/30/AR2008103004223.html)