If you rely on public transportation in Chicago, Atlanta, San Francisco, Los Angeles, or Washington, it may be time to consider a bike. The public-transit authorities of these cities have just found out that money they have borrowed from financial agencies will have to be paid back in a hurry. Says the Washington Post:
AIG had guaranteed deals between transit agencies and banks under which the banks made upfront payments that the agencies agreed to repay over time. But AIG's financial problems have invalidated the company's guarantees, putting the deals in technical default and allowing the banks to ask for all their money at once.
In Metro's case, the regional transit agency could face up to $400 million in payments, the system's chief financial officer, Carol Kissal, said in an interview yesterday. One bank, KBC Group of Belgium, has told Metro that it needs to pay $43 million by next week. Metro officials confirmed the details but declined to name the bank.
What does this mean for riders? Potential service interruptions, said the Post , or worse.
In Los Angeles, "the worst-case scenario is that we could end up having to come up with $100 million to $300 million overnight," said Marc Littman, spokesman for the Los Angeles County Metropolitan Transportation Authority. "That would be a tough nut to swallow." Cutting service would be an option, he said, but a last resort. "Our board is looking at different options right now."
The transit agencies are seeking relief from the treasury.