So who is the latest group to line up for a piece of the bailout pie? Mass transit systems. Add them to list that now includes banks, auto makers and insurers.
From the Washington Post:
AIG had guaranteed deals between transit agencies and banks under which the banks made upfront payments that the agencies agreed to repay over time. But AIG’s financial problems have invalidated the company’s guarantees, putting the deals in technical default and allowing the banks to ask for all their money at once.
In Metro’s case, the regional transit agency could face up to $400 million in payments, the system’s chief financial officer, Carol Kissal, said in an interview yesterday. One bank, KBC Group of Belgium, has told Metro that it needs to pay $43 million by next week. Metro officials confirmed the details but declined to name the bank.
Transit agencies have met with the Treasury Department to request federal help. The government could back the deals instead of AIG, or it could change tax policy to help the banks and keep them from demanding payments.
Treasury spokesman Jennifer Zuccarelli declined to comment, except to say, “Treasury is aware of this situation.”
This is the new game in Washington DC. Because the bailout law gave basically unlimited latitude to the Treasury Deparment to use the hundreds of billions of funds, lobbyists and special interest groups are all lining up to take advantage.
Is there anyone who can’t be bailed out? Well Treasury officials say the law mandates them to rescue financial institutions. But remember what happened when the SEC sought to restrict short-selling in financial institutions and wound up protecting Sears and CVS? Increasingly, industries far removed from what you might think as financial business are engaged in attempting to show that they too are adversely impacted by the credit crisis and deserving of bailout bucks.