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Dear Secretary Peters:

I am requesting your assistance in contacting the Treasury Secretary to seek immediate assistance to avert a crisis in the transit industry.

At least 31 of the largest transit agencies across the country are at risk of financial catastrophe as a result of the upheaval in world financial markets. Investors in Lease-In/Lease-Out and Sale-In/Lease-Out (LILO/SILO) transactions are taking advantage of technical provisions of the agreements to declare the transit agencies in default of their obligations in spite of the sound financial instruments – U.S. Treasury securities – that guarantee every payment for the lives of the Federal Transit Administration promoted and approved transactions.

There is an efficient, financially sound, and risk free means of avoiding both the defaults and the cascading effects these defaults would likely have on state and local financing markets, transit services, and congestion. The Treasury, under authority of the Emergency Economic Stabilization Act, could effectively replace AIG or other troubled entities as the holders of the securities “baskets,” eliminating the technical default and restoring the level playing field necessary to reasonably unwind these deals.

We urgently need Treasury to act quickly to avert the disastrous results of payment demands that are already being delivered to some of the biggest transit agencies in the country and are likely to be delivered soon to dozens more. We have communicated with several officials at Treasury but have yet to receive any feedback. Your support and assistance would help immensely to bring this issue before the appropriate officials.

My staff and I, as well as those of the transit agencies at risk, stand ready to assist you in any way necessary in making the case to the Treasury. For assistance, please contact James LaRusch or Robert Healy of my staff at (202)496-4800, or email jlarusch@apta.com or rhealy@apta.com.

Sincerely,

William W. Millar
President
American Public Transportation Association

WWM/tjj