Angie Schmitt discusses findings included in a new report by Refund Transit, a coalition of transit unions and community organizations, that investigates the effect that interest rate swaps - "deals that were supposed to protect transit agencies against increases in borrowing costs" - are having on agencies across America.
With interest rates at historic lows, and transit agencies "stuck paying many times the current competitive rates," agencies are suffering from the very impacts that the interest rate swaps were supposed to protect them from.
According to Schmitt, "Refund Transit's survey of 12 major transit providers found that public transportation agencies were overpaying by $529 million thanks to these deals, which were sold as a way to minimize risk and save money. Los Angeles's transit system is losing $19.6 million annually compared to the interest rates they would otherwise be paying. Detroit - where low-income workers face up to three-hour transit waits and are occasionally stranded - loses $54 million annually. The state of New Jersey's transit system loses $83 million, according to the report."
The Refund Transit coalition, which includes the Amalgamated Transit Union, the Transportation Equity Network, and grassroots community groups, are calling on banks, many of which of course "were insulated from the economic crash by taxpayer funds," to "voluntarily renegotiate these deals."
Good luck with that.
