Menendez: Transit Agencies Need Help Escaping Tax-Shelter Trap

Lingering questions over the role that tax shelters played in the D.C. Metro crash continue to pique congressional interest in helping local transit agencies break free of lease deals with Wall Street.

Sen. Robert Menendez (D-NJ) has just written to House Majority Leader Steny Hoyer (D-MD) — who is working on a new funding package for D.C.’s cash-strapped transit system — urging Hoyer to look at his proposal for a windfall profits tax on banks who seek to profit from SILO deals with transit agencies.

From Menendez’s letter:

The bottom line is that, in order to help prevent such a tragedy in the future, we must ensure that transit agencies have adequate resources to keep passengers safe.

As part of that, I strongly believe that we must protect transit agencies from banks who are seeking to exploit a technicality that would result in agencies having to pay banks millions of dollars that could otherwise be used to shore up equipment and ensure safe operations, even though they have not missed a single payment to the bank. Once we remove this threat, the door will be open to terminating these transactions in a fair and equitable manner.

The push to aid transit agencies caught in the SILO tax trap is likely to arise at a July 14 House hearing on this week’s Metro crash.