As the MTA is fond of pointing out how pension and health care benefits are directly responsible for the next fare hike, the unions have responded in turn with complaints about the MTA’s debt refinancing structure. In a report [pdf] issued by the ATU, the labor union alleges that interest rate swaps executed from 1996 through the mid-2000s is costing the MTA over $100 million annually.
The MTA disputes these findings. “To compare transactions we entered into years ago, compared to what you can get in risky variable rate debt right now is either irresponsible or deliberately misleading,” MTA spokesman Adam Lisberg said to WNYC. “They are simply wrong.”
Economists, meanwhile, have urged the MTA to renegotiate with the banks much as they have had to do so with their other contractors. Parrot also noted that the MTA is about to go to market to sell billions in new bonds to refinance its capital construction program. “They could say to the banks, ‘If you’re unwilling to renegotiate these credit swaps, we’re not so sure you’re going to get a piece of these bonds,’” economist James Parrot said. The MTA claims such a move is impossible due to the MTA’s reliance on the banks, which may be the problem in the first place.
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