Some public transport agencies engaged in a similar kind of financial risk-taking that has caused large banks and companies to fail and contributed to the global financial meltdown. Rick Karr reports in the latest installment of the "Blueprint America" series.
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Next, how the financial crisis is hitting public transportation.
As we just heard, Fed Chairman Ben Bernanke today singled out insurance giant AIG as one of many companies that took big risks with devastating consequences. It turns out that public transportation agencies also made deals with companies like AIG, and those are now coming home to roost.
We have a report on this from special correspondent Rick Karr. It's part of our series on infrastructure called "Blueprint America," produced in collaboration with WNET-New York.
Public transit systems across the country are facing a crisis: mounting budget deficits. More than 60 transit agencies have proposed fare hikes, service cuts, or both. And they've been begging lawmakers for more subsidies.
But there's another looming fiscal crisis in public transit that could make things even worse: a series of complex financial deals that transit authorities nationwide made with banks in order to stretch their budgets. Now those deals could end up costing systems nationwide billions of dollars.
Carol Kissal of Washington, D.C.'s, Metro says the deals could hit her agency hard.
CAROL KISSAL, Washington Metropolitan Area Transit Authority:
I would have to pay $330 million of liquidated damages, which would wipe out my capital budget. So this would mean, you know, no maintenance on track, delay, cuts in service. Repairs would go to the wayside.