Lawmakers Press White House To Restore Transit Provision
Saturday, December 20, 2008
More than 30 members of the House and Senate appealed to President Bush yesterday to provide financial protection for Metro and 31 other transit agencies as part of the White House's auto rescue plan.
The protection had been included in the auto bailout bill that passed the House with White House support, but failed in the Senate. The transit relief was not included in the plan Bush announced yesterday.
"It's critically important that [Bush] also act to protect [Metro] and the rest of our nation's public transit systems from becoming collateral damage due to troubles they had nothing to do with," said Rep. Chris Van Hollen (D-Md.), who along with Rep. Jim Moran (D.-Va.), led the group that signed the letter.
Transit advocates have wanted the federal government to step in as a guarantor in complicated long-term leasing deals between transit agencies and banks. The deals are souring because they were insured by troubled companies such as American International Group. When AIG lost its top credit rating, the contracts were put into default, allowing banks to demand millions in immediate payment from cash-strapped transit agencies.
The House bill authorized the federal government to guarantee the transactions.
White House spokesman Tony Fratto said Bush is unlikely to aid the transit agencies because doing so would be seen as rewarding tax shelters. He said the provision was included in the House bill over the White House's objections.
The deals, made from the late 1980s to 2003, were a once-common way for transit agencies to raise cash, and for banks to receive billions in tax breaks. The transactions were outlawed by the Internal Revenue Service several years ago.