Press release in my inbox about this AIG/transit mess:
Today, U.S. Senator Robert Menendez, along with Senators Richard Durbin (D-IL), Frank Lautenberg (D-NJ) and Barbara Boxer (D-CA) are calling on Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke to prevent a potentially crippling financial situation that transit agencies are facing as a result of the credit crisis. The collapse of insurance giant AIG has caused deals between banks and transit agencies to fall apart, allowing banks to demand billions of dollars from the agencies.
“Any reduction or degradation in transit service could mean that our constituents will struggle getting to work or school, squeezing our state economies and family budgets even further,” wrote the senators. “This is a time when we should encourage mass transit use and a financial blow to our transit agencies such as this one is a major setback to that effort”
The senators, who represent states with major public transit systems, called on the Treasury and Federal Reserve to each appoint senior officials to work with the Department of Transportation and large transit agencies in developing a solution that will avoid a fiscal crisis for the agencies. The issue stems from leasing arrangements between transit agencies and banks in which the banks purchased transit infrastructure and leased it back to the agencies. AIG served as an intermediary in these transactions. The collapse of AIG left its credit rating in tatters, which banks have exploited to invalidate the deals and demand full payment up front from the transit agencies.
Text of the letter can be read here. Not sure what kind of effort led by Senators “who represent states with major public transit systems” is missing Hillary Clinton and Chuck Schumer. And of course Dick Durbin’s not the only Senator from Illinois.