MTA chief in D.C. lobbying Feds to help with potential $165 million deficit

MTA head Roger Snoble has headed to Washington. The reason? MTA, like many other transit agencies across the country, is under threat of having corporate investors demand they return tens of mililons of dollars because of the failure of AIG, the massive insurance company that received $85 billion in taxpayer money in September.

The background: in the late 1990s and early in the next decade, Metro sold off a huge number of buses and trains to various corporate investors, including Phillip Morris and Comerica. They then entered into long-term leases to use the equipment. The sales netted about $65 million to put towards operating costs, said MTA spokesman Marc Littman.

AIG insured the deals, and part of the agreement was that if AIG ever lost its triple-A bond rating, the agency would have 60 days to find a new insurer. Otherwise, investors could legally claim repayment of the leases.

In September, AIG lost its rating. Now, Metro is officially over the 60 day period and could have their debt called in anytime- so far, no one has pressed the issue, according to Littman.

Since AIG's bailout, the government has become its largest shareholder. Since they have taken responsibility for the company's assets, MTA figures they ought to take responsibility for its clients. A federal guarantee of the leases would satisfy MTA's legal requirements, said Littman.

As long as MTA was still solvent and able to makes its lease payments, it would not cost taxpayers any money, according to Littman.

I'll be looking at this in more depth for a story either for Friday or this weekend.