Comments on: The Wall Street Tax Shelter That Crashed Your Local Transit Agency

By: Larry Littlefield

Larry Littlefield — Sun, 28 Jun 2009 19:46:15 +0000

"Where is Larry Littlefield with the Generation Greed angle on the story?" All these deals have up front benefits to hand out with long term costs, disguised as mere "risks." It was to prevent future generations greed from wrecking the state that specific provisions were added to the NYS Constitution, requiring referendums for debt for example. Unfortunately, given that the political clubs appoint the elected judges, they forgot to add the all important "and we're not kidding" clause. I wonder how those pension fund investments in hedge funds at working out? Given the up front fees, I'm sure they worked out fine for the hedge fund managers.

By: clever-title

clever-title — Sun, 28 Jun 2009 18:57:44 +0000

To blame the bankers for this accident would be like blaming a mortgage lender for a roof failure on a house where the owner didn't perform the necessary maintenance.

Like any other lending deal, there would be provisions to terminate the SILO agreement if WMATA offered the bank a payoff of the principal.

By: bikerider

bikerider — Sat, 27 Jun 2009 04:53:35 +0000

"The NTSB recommended replacing or retrofitting the rolling stock."

Ian:
Federal regulators are still stuck on the very antiquated notion that the best way to survive accidents is to build stiffer and heavier traincars. This accomplishes nothing, except higher operating costs and poor braking/acceleration performance.

By contrast, European and Japanese approach to railway safety is accident avoidance; i.e. improved track maintenance and signaling systems (note that the Metro accident was most likely caused by the latter).

If the NTSB were to examine any Japanese passenger railcar, it would declare those to be "unsafe" too, even though Japan has the world's best safety record.

By: Ian Turner

Ian Turner — Sat, 27 Jun 2009 02:11:17 +0000

Kaja, the Supremes have ruled that current taxation on past income is not ex post facto, because the tax is payable only after the law is passed. The prohibition on ex post facto lawmaking does not mean that congress is cannot consider the history of an entity or its finances. To look at it a different way, if Morgan Stanley today refused to pay taxes from last year's tax law on last decade's deal, the law that Morgan Stanley is breaking was still made in the past.

By: Niccolo Machiavelli

Niccolo Machiavelli — Sat, 27 Jun 2009 01:01:28 +0000

Where is Larry Littlefield with the Generation Greed angle on the story?

By: J:Lai

J:Lai — Fri, 26 Jun 2009 23:27:43 +0000

SILO deals are really not the culprit here, at least from a transportation point of view (different story if you are talking about pro/con of tax shelters . . .)
Anyway, it doesn't seem surprising that municipal transit agencies would engage in restrictive lease agreements in return for steady revenue. They are starved for funding and need to monetize whatever they can just to provide basic service.
The real issue is that so little funding is allocated to transit.

By: Ian Turner

Ian Turner — Fri, 26 Jun 2009 20:22:36 +0000

bikerider, that's not entirely true. In the linked article to the linked article, it is explained that the NTSB recommended replacing or retrofitting the rolling stock, and one of the excuses provided by WAMTA at that time was that they could not due to the terms of the leasing agreement.

By: Kaja

Kaja — Fri, 26 Jun 2009 20:05:39 +0000

> deals that were given a retroactive pass by Congress

Article 1 Section 9; Congress shall make no ex-post-facto law.

By: bikerider

bikerider — Fri, 26 Jun 2009 19:52:23 +0000

This is irresponsible and erroneous reporting. The term of the lease was for the expected life of the railcar. Even if the lease was not in place, Metro had no plans, no funding, and absolutely no reason to replace the cars, which have an expected lifespan of at least 40 years.