In Los Angeles, they”ve said that this problem will force service cuts. Will this mean Metro cuts service?
Every transit agency has a different financial structure. If the Belgian bank is allowed to take advantage of taxpayers in this manner, Metro could be forced to pay $25 million to this bank. It is likely that the money would come from the FY2009 Capital budget. That would have a significant effect on infrastructure maintenance between now and July 2009. In the future, Metro could end up paying higher interest rates and it could be more difficult for the authority to borrow money to pay for capital improvements. That means there would be less money for new trains and buses and for the maintenance of elevators and escalators. All of this could be easily avoided if the Treasury Department uses the authority it has to back or replace AIG as the insurer of these financial transactions. This is by far the best solution, as there is no practical risk to the federal government because the payment accounts are already backed by Treasury bonds. Additionally, the federal government has bailed out
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