
Nine years ago, in collaboration with state officials, the mighty investment company Bear Stearns played a special role in shaping the course on which the region’s transit system now finds itself.
Not only did this financial titan advise the Metropolitan Transportation Authority on a five-year, $17-billion capital program, but more notably its executives personally sold the plan to state lawmakers — helping generate commissions for the firm while temporarily funding mass transit.
From today’s perspective, of course, the deal represents fiscal risk and folly.
Bear’s collapse a year ago signaled other global financial failures to come, and the debts carried by the state-run MTA drive its latest threat of massive fare hikes and sharp service cuts.
Watchdogs suggested that the Pataki administration and its sparring partners in the State Legislature were mortgaging the future. Policy makers, they believed, figured they’d derail from that track when they came to it.
Wednesday, State Sen. Brian Foley’s office cited data showing how MTA debt service payments of $609 million in 1996 have spiked to a forecast $1.5 billion in 2009. That works out to an estimated $125 million a month, said Ibrahim Khan, spokesman for Foley (D-Blue Point).
“Everyone predicted it, and it came true with a vengeance,” Gene Russianoff, of the city’s Straphangers’ Campaign, said Tuesday, following a news conference with Gov. David A. Paterson aimed at prodding state senators to act on a painful new revenue plan.
Lee Sander, the MTA’s executive director, said: “In 2000, Albany put our entire capital program on a credit card.”
Beyond the problems that usually come with overborrowing, the due date for this huge credit card arrives at an especially uncertain time.
Fiscally, all levels of governments face major pressure as the economy contracts and credit tightens. And politically, the MTA crunch hits just as Paterson struggles with his clout — and new Senate Majority Leader Malcolm Smith looks around for some.
With Paterson well aware ...
(AP Photo)
Continue reading "Defunct finance titan helped set MTA on crash course" »