The Washington area’s congressional delegation united Monday to call for federal help in preventing the nation’s ballooning credit crisis from grinding Metro to a halt this week.
The cash-strapped transit agency could be required to make bank payments of up to $400 million, more than $40 million of it by Wednesday, after the collapse of an insurance group that guaranteed Metro’s financial deals.
Insurance giant AIG backed deals in which banks bought costly railcars for Metro and then leased them back to the transit agency.
Metro engaged in 16 of the lease deals between 1997 and 2003, all of which are now defunct. Banks now can force the transit agency to settle its debts, and one bank is demanding a $43 million payment from Metro this week.
Thirty other transit agencies nationwide face similar situations.
“Allowing investors to proceed to defaults in these transactions … would force sharp reductions in transit services in the nation’s largest urban areas,” seven of the region’s congressional representatives wrote in a letter to U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke.
Reps. James Moran, D-Va., Steny Hoyer, D-Md., Chris Van Hollen, D-Md., Tom Davis, R-Va., Frank Wolf, R-Va., Donna Edwards, D-Md., and D.C. Del. Eleanor Holmes Norton are requesting that the Treasury Department step in to insure the deals of Metro and other transit agencies before they default on payments.
