Transit systems join long line for federal bailouts
The CTA and 10 other transit agencies went hat in hand to Congress Tuesday, asking for the Feds to guarantee long-term financing deals that have soured recently with the global credit meltdown, Crain's Chicago Business reports.
Last week, Crain's reported:
"The Chicago Transit Authority has asked a judge to intervene in a contract dispute that threatens to shut down the agency’s Green Line and force the agency to pay $76 million in damages.
"The CTA has an agreement with EntreCap Public Financial Holdings LLC of Connecticut and two other organizations to lease back property, railway tracks and train stations on its Green Line. When the 45-year contract was signed in 1998, the CTA’s payments were guaranteed by American International Group Inc.
"Two months ago, AIG’s credit rating was cut amid the U.S. mortgage meltdown that claimed several financial institutions and forced a federal bailout of the former insurance industry powerhouse.
"AIG’s rating cut triggered a clause in the CTA leaseback contract that required the already cash-strapped transit agency to find another backer in 30 business days or face a $76-million penalty, along with the end of the deal with EntreCap."
Tuesday the transit agencies asked the Treasury Dept. to guarantee these deals instead. Crain's had a great quote from a Maryland congressman: "I made the point that it would be wrong to ride to the rescue of private Wall Street firms and then leave public transit agencies out in the cold," Rep. Chris Van Hollen, D-Maryland, told The Associated Press last month.