Transit Must Be Run For Investors, Not Riders
Professor Joseph Bankman, a leading scholar in the field of tax law, is quoted in the San Francisco Chronicle on the consequences of government transportation agencies fighting bankrupt guarantors in court:
Wall Street banks, and Wall Street investors, have already spirited away $700 billion worth of taxpayer bailout money. But it's not enough. They want more and more of your money - and they're willing to leave you literally stranded, without a bus or rapid transit car in sight.
If it sounds like a nightmare, that's because it is. And without congressional action, local transit agencies like BART, S.F. Muni and Caltrain could be bankrupted by obscure financial agreements they entered into long ago with these banks and investors.
It doesn't matter that the deals have been sworn off by federal officials and invalidated by the Treasury Department. And it certainly doesn't matter that taxpayers, businesses and cities rely on these transit systems to keep life moving.
What matters is a tax shelter.
"If they lose, they'd have to come up with an amount they can't possibly come up with," said Joe Bankman, Ralph M. Parsons Professor of Law and Business at Stanford Law School. "And if they're in default in this agreement ... they could see all their other financing arrangements dry up."