- This topic is empty.
-
Posts
-
Looks like we have another ‘bailout” request today. They are saying that they were scammed into signing this deal that is linked to AIG. :sarcasm:
The ongoing financial crisis could put public transit systems nationwide at risk of defaulting on more than $2 billion in loans backed by troubled insurer American International Group, an industry advocacy group said Thursday.
The problem stems from “lease-back transactions” — made from the early 1990s through 2003 — in which transit agencies sold equipment to banks and then leased them back.
“Thirty-one transit agencies nationwide used these leverage lease actions to finance assets,” said Rob Healy, vice president of government affairs for the advocacy group American Public Transportation Association.
He added that one of the requirements was that securities used to make the lease payments were guaranteed with an AAA rating, which AIG provided in most cases.
But AIG’s rating was downgraded after it accepted a federal government bailout in September, allowing the banks to demand early payments.
The heads of public transportation agencies in 25 cities and 17 states sent a letter to Treasury Secretary Henry Paulson on Wednesday asking for the federal government to act as a backer to prevent banks from collecting millions of dollars the agencies cannot spare.
The letter, signed by heads from agencies in New York, Massachusetts, Pennsylvania, Georgia, Texas, Oregon, California, New Jersey, Missouri, Chicago and metropolitan Washington, calls on the Treasury Department to act under the Emergency Economic Stimulus Act to prevent “significant additional costs and losses to the transit agencies, and, ultimately, to the taxpayer.”
Terry Matsumoto, chief financial services officer of the Los Angeles County Metropolitan Transit Authority in California, said the Metro could be forced to make $165 million in early payments if the government does not intercede.
“The last thing we’d like to do is cut service since ridership is at an all-time high,” he said. “But we would have to do that, in addition to raising fares and cutting future capital programs” if forced to make early payment on lease-back transaction loans.
New Jersey Transit would have to make $150 million in early payments, spokeswoman Penny Hackett said.
“The federal government has an opportunity to protect commuters and taxpayers by addressing the economic exposure of mass transit agencies such as NJ Transit that resulted from lease-back transactions with AIG,” said Kris Kolluri, the commission of the New Jersey Department of Transportation.
The Washington Metropolitan Area Transportation Authority, which serves the District of Columbia, Maryland and Virginia, could be forced to make $400 million in early payments, officials said.
The agency is in court with KBC Group of Belgium, which has requested $43 million in early payments. The hearing began Thursday and will reconvene Friday, agency spokeswoman Candace Smith said.
AIG spokesman Nick Ashooh said that AIG is still insuring the agreements, but because they’ve been downgraded, the deals have been put in default, which allows the banks to seek early payments.
Ashooh said that AIG’s role has been very passive and that the issue is really between the transit agencies and banks involved.
“These securities are incredibly sound,” Healy said. “It’s really the loss of the rating that has caused the situation. We really believe that if Treasury could step in and back the securities, it could eliminate risk at no cost to taxpayers.”
I’ll see what my redneck black asian boss lady has to say about this….my true feeling concerning AIG……..
I was against the $85,000,000,000.00 bailout of AIG. Instead, I’m was in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.
To make the math simple, let’s assume there are 200,000,000 bonafide U.S. Citizens 18+. Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up. So divide 200 million adults 18+ into $85 billon that equals $425,000.00.
My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend. Of course, it would NOT be tax free. So let’s assume a tax rate of 30%. Every individual 18+ has to pay $127,500.00 in taxes. That sends $25,500,000,000 right back to Uncle Sam. But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00. What would you do with $297,500.00 to $595,000.00 in your family?Pay off your mortgage – housing crisis solved.
Repay college loans – what a great boost to new grads
Put away money for college – it’ll be there
Save in a bank – create money to loan to entrepreneurs.
Buy a new car – create jobs
Invest in the market – capital drives growth
Pay for your parent’s medical insurance – health care improves
Enable Deadbeat Dads to come clean – or else
Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back.
And of course, for those serving in our Armed Forces. If we’re going to re-distribute wealth let’s really do it…instead of trickling out a puny $1000.00 ( ‘vote buy’ ) economic incentive that was being proposed by one of our candidates for President. If we’re going to do an $85 billion bailout, let’s bail out every adult U S Citizen 18+! As for AIG – liquidate it.Sell off its parts.
Let American General go back to being American General.
Sell off the real estate.
Let the private sector bargain hunters cut it up and clean it up.Here’s my rationale. We deserve it and AIG didn’t. Sure it’s a crazy idea that can never work. But can you imagine the Coast-To-Coast Block Party! How do you spell Economic Boom? I trust my fellow adult Americans to know how to use the $85 Billion. We deserve it more than the geniuses at AIG or in Washington DC. And remember, The Family plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.
:wink-wink :wink-wink :wink-wink :wink-wink :wink-wink :wink-wink :wink-wink :wink-wink :wink-wink :wink-wink :wink-winklol …
:roflmao:But … 200 million people only get $425 each to make up $85 billion …
You really gotta check that maths before launching a platform …
:tongue:And didn’t America already get a $600 per person consumer stimulus package already?
What a waste of money that was …
:flush:@Redbush54 187851 wrote:
I thought was the kind of math that our government used……….:roflmao:
Hey Girl!
Being that we got conned in to saving AIG and giving them money to waste I can see your plan working.
heheLooks about how Paulsen calculate stuff only he keeps eveything for himself and the banks. :roflmao:
There are many small and medium towns and Europe who got screwed with the sell lease back deals as well. They shouldn’t whine though. That is just the community equivalent of taking out a mortgage and now they’ve been caught with their hands in the cookie jar. Worse still they sold their cash flow producing assets to get an immediate profit which imho is a pretty reckless move for a state run institution.
Let’s keep whining about people whining. Do you not see the collapse around you? Will you still be so amused 5 years into a worldwide depression?
In the US the Universities and Charitable institutions run on money, often from an endowment, most endowments are down 40-50%, most of their benificiaries will have to cut spending by at least that much. Cities, Governments, Universities use debt to raise money for buildings, as their funding drops, their credit ratings drop, causing their rates to go up, etc.
This is rippling across the world, across industries, charities, etc. The world ran on credit and credit is suddenly gone, the victims of this are sometimes those who are responsible for it, but mainly it’s the average person who loses their job, their home, etc. I’m sure there were a lot of folks in 1929 who thought those who were broke deserved and were idiots. By the time unemployment exceeded 25% and thousands of banks had failed, i’m sure those who were employed and still had a house became a bit less smug.
The blame for the stupidity crosses national borders, professional disciplines, social classes and even economic strength of the countries involved.
To me the most interesting/shocking/amusing thing is how many “stupid” things so many different people, businesses and nations did at the same time. I don’t know any Americans or Canadians who took out mortgages in a foreign currency from a foreign bank, but it was appearently the rage in Iceland, Hungary and other parts of Europe. Was that stupid? Was it worse than Americans taking interest only loans on properties they could barely afford.
I think we all bought into how the internet changed everything and now the world was a global marketplace, etc. It sure seemed like it the economy was moving so fast because information moved so much easier.
Well info does move fast… turns out the emperor had no clothes
turns out the emperor had no clothes
of course the Emperor has no clothes – he had to sell them to pay his mortgage.
It is a question of moral hazard. If you let everyone get away with their economical errors and bail them out set your clock to 20 years from now and we will have the next big crisis with some other house of cards that will collapse then. And even though I understand that bail outs are the only way to avoid an epic melt down doesn’t mean I have to like them or cheer for them. People who acted in a reckless way squeezing every asset they had for credit like a lemon are getting off easy. And if there’s one thing they should do it is to stop whining and get to work.
You wouldn’t have much sympathy with some drunkard tool who sets your whole neighbourhood on fire and then says well I dropped the matches because I was so drunk sorry :tongue:
Moral Hazard – so we should send the world into financial collapse, destroy 30 years of economic growth and put 10s of millions of people into poverty to prove the point that financial markets are dangerous?
Are you also in favor of not providing medical treatment to children who hurt themselves while playing?
The people who will end up on the streets won’t be the bankers who pissed away their companies’ equity and caused the crisis. I’m sure the millions who will be wiped out have learned their lesson: Businessmen, Financial Professionals can’t be trusted, don’t know what they are doing and are responsible for putting people out on the street.
It was the Laissez Faire, let the markets regulate themselves, approach you seem to be promoting that is the lesson here. Markets may provide for low cost transactions and financial allocation but they don’t work for society’s benefit. Government regulation and intervention in markets is the way to help steer it more to the needs of the people who make it up.
And even though I understand that bail outs are the only way to avoid an epic melt down doesn’t mean I have to like them or cheer for them.
How does this say I want to see a financial collapse? How do I support free, unregulated markets here? As a matter of fact I don’t. I’m for government regulation. However in the prisoner’s dilemma the only solution here is the bail out and as in the game it is suboptimal! That still means it is the right solution but I still think it is suboptimal because many get a free pass. There is also a difference between a sweeping, badly managed bail out and a well administered, more focused, better thought through version. Unfortunately we are witnessing the former rather than the latter.
Another thing I do believe in though is the business cycle and even though there may have been substantial economic growth some of that will be lost now and rightly so. You can only cushion the business cycle so much but you cannot undo it. I am also glad to see that there are less $40 million penthouses in NY – that money could probably feed an entire African country for a year. If this crisis does one good thing it is probably to ground everyone a bit.
