The Regional Transportation Authority is among about 30 transit agencies around the nation that could be on the hook for millions of dollars because of the woes of insurance giant American International Group (AIG).
Executive Director Stephen Schlickman said on October 23 that the RTA alone could have to kick in $105 million.
According to Schlickman, the issue involves “lease-back” deals struck by the CTA and Metra in the 1990s. With the deals, transit agencies sold or leased assets like rail cars and facilities to investors, then leased them back. The agencies got the cash, and investors got a tax credit.
These deals required a guarantee by another financial institution in most cases, AIG. But when AIG’s credit rating fell, it left the transit agencies obliged to pay back investors.
Schlickman said the RTA is working with other agencies to try to get the U.S. Treasury to guarantee AIG’s credit.
Information from: Chicago Sun-Times,
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