Photo of the Day: November 27, 2009
Car Pushed Into Anacostia River By Train
Morning Roundup: Black Friday Edition
Devendra Banhart @ 9:30 Club
Saturday Thanks Don't End At Thanksgiving Photo: November 28, 2009
Belgium's population is 97% urbanized. Crazy, eh? So, it makes sense that the country of decadent waffles and Peter Paul Rubens is pretty boffo for mass transit. The country's population is connected through an impressive network of rail systems, both on a local and national level, including currently expanding Metros in Antwerp, Ghent and Brussels. Let's just say that if there ever was a country made for mass transit, the massively dense Belgium is probably near the top of the list.
That said, we were a little frustrated when Belgian bank KBC Group felt like it needed to immediately collect on a $43 million loan provided to WMATA - especially since WMATA's never missed out on one single payment.
You probably know by now that the mega-collapse of AIG meant that WMATA was without insurance for the $43 million loan from KBC and numerous other loans. Fortunately for the beleaguered D.C. transit agency, KBC somewhat came to it's senses (perhaps realizing that the political climate for rail funding in America isn't quite what it is in continental Europe), and granted WMATA a ten-day reprieve on Thursday. A hearing is scheduled for November 12, at which Metro will fairly ask for more time to find alternate insurance means.
The danger for WMATA isn't just that they won't be able to pay off the loan in full immediately - although, that is obviously an issue. The wider and more urgent problem if they are unable to find alternate insurance is that other banks will probably also immediately recall loans (totalling upwards of $450 million) from the cash-strapped agency. Fortunately, it seems like WMATA has the backing of the federal government this time, but we all know how dependable that can be.
So, c'mon KBC - maybe you haven't been following along with Metro's years-long battle to try and get the government to fund even a small percentage of our high-speed rail, but since you loaned millions to WMATA, you probably should. We'd really, really like it if the newly earned $1.5 billion in funding over the next ten years could be used to rebuild our crumbling platforms and tracks, instead of paying off banks because certain people couldn't stop with credit default swaps. Of all people, you Belgians must understand the importance of public transit. Cut us a break, will you?
Photo by loufi, used under Creative Commons license
add to stumble upon
add to reddit
tweet this
post to facebook
Maybe they figured they'd already done enough for us by giving us mussels, fries, lambic, waffles, and Tintin?
This has nothing to do with transit-friendly Belgium and everything to do with the imploding housing/banking confidence game. KBC is as much up to its ass in the credit default swap latrine trench as AIG, Lehman Brothers, and Credit Suisse. So they're scrambling to find any cash they can to stay afloat. In the end, they'll probably end up with a chunk of that $700 billion bailout, seeing as most of the Wall Street banks being bailed out are inevitably tied to multinationals. So KBC'll get paid twice for f**king their financials into the dirt and WMATA will have to resort to using CHUDs in harnesses to pull their trains because they can't pay their electric bill. God bless America and Merry F**king Xmas.
john kelly advocates invading belgium over this: here and here.
I'm going to protest by drowning the Belgian Embassy in Admiration mayonnaise.
@ Kevrock: Tintin comment FTW!
I propose going to Granville Moore's and demanding "Freedom Frites" and pouring their $11 beers out onto H St.
Von Schliefflen is finally vindicated!
How far can these Sprouts push us? When are we going to tell the Phlegms, "Enough is enough?" We're tired of your unreasonable banking demands and your lambic ales and your mussels in white wine and your caving-in to German blitzkriegs.
The choice, she's a clear un: either you're in favor of supporting mass transit, or you're in favor of road signs being in both German and French.
Belgium is so on the verge of ethnic civil war, just wait
Where's Belgium? Virginia or Maryland?
WMATA should just up the fares to cover the cost of repayment. $390.00 will get you from Union Station to Judiciary Square...
This is interesting, at least for deal nerds. Apparently, the transaction is structured as a sale-leaseback rather than a loan. When the transaction was consummated, this structure created tax benefits for the bank. And then the tax code changed. As part of the changes, sale-leaseback tax benefits were eliminated. The loss of the tax benefits means that sale-leaseback structure is no longer advantageous for banks and they're generally looking to get out. It seems to be a problem for transit agencies generally.
It'd be fun to read WMATA's transaction dox to see what the insurance provision actually requires. And to see what other technical defaults are possible. Even if WMATA cures the insurance default, the bank will be looking for outs left and right.
We ran the Belgians out of Swampoodle in 'Ought Six. We can do it again.
So now we know what the bag searches are really about.
The police will be swiping any spare change from the bottom of your bag, as a way to raise the $43 million!
How Waffle!
cumbling platforms
Thanks, districtdon. The "r" was unfortunately consumed with this morning's breakfast of Almond Joys and Dubble Bubble.
Hehe sounds like a breakfast of champions. I don't mean to be such a stickler. I'm glad you keep up with the comment board on your pieces.
Earlier this week, I had to email Ben at Consumerist for conveying in a piece he wrote -- regarding outsourced Chase Bank call centers -- about the people of the Philippines (where I'm from) as Phillipinians instead of the correct form: Filipino. He fixed it in very short order (but didn't email me back anything *sad face*). Consumerist for cryin' out loud!
But, your typo was just teehee funny.
Did WMATA at least get some collateral on its insurance from AIG? The city should have a claim to a few cash-worthy planks from that sinking ship. (Way well done video explaining this kind of credit default swap: http://www.publicradio.org/columns/marketplace/offair/2008/10/untangling_credit_default_swap.html ).
If banks are able to make a profit from leasing these vehicles, then wouldn't it make more financial sense for metro to own its own vehicles? I know I don't understand all the details, but I draw a parallel to everyone's decision of lease vs. buy. Usually it's based on cash on hand rather than which one is better terms. So maybe it's a symptom of metro's funding streams, but metro's not going anywhere anytime soon.. it should own its own infrastructure. Can purchases of cars be financed some other way?
Well, to quote Calvin Coolidge (perhaps apocryphally), "They hired the money, didn't they?" It seems like "greedy" sub-prime homeowners aren't the only one being caught with their pants down once the magic finance carousel stopped spinning and the bills came due. Metro signed this too-slick-for-words deal, and to the extend KBC is enforcing the terms of the contract, well, that's their prerogative.