BREAKING NEWS: AIG woes could result in Metro service cuts
Between the late 1980s and the early 2000s, Metro (a.k.a. the MTA) sold its rail cars and more than 1,000 of its buses to private investors and then leased the equipment back. The middleman in those deals -- which netted the Metropolitan Transportation Authority about $65 million in profits -- was the financial giant American International Group.
AIG got caught up in the housing slump and was recently bailed out by the federal government. AIG's bond ratings have slipped and now -- to simplify a very complicated story -- Metro is on the hook to find another middleman, a proposition that could potentially cost it tens of millions of dollars.
“I’ve lost a lot of sleep over this,” Terry Matsumoto, the chief financial service officer and treasurer for Metro, told me earlier today. He said it's almost certain that service cuts would occur if Metro had to restructure its deals.
My colleague Martin Zimmerman and I have a story for Saturday's editions that is currently being edited. When it's ready for publication later this evening, I'll post it here.
In the meantime, here's a link to Metro's report on the issue.
