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Millions May Suffer From MTA Service Cuts

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Oct 17, 2008 10:51 pm US/Pacific

Millions May Suffer From MTA Service Cuts

LOS ANGELES (AP) ― Nearly 1.5 million people who ride buses and trains in Los Angeles County might face major service cuts from the Metropolitan Transportation Agency.

The MTA says its lease-back deals involving AIG have gone sour since the financial giant recently ran short of cash and was bailed out by the federal government.

Between the late 1980s and 2003, the MTA sold its buses and rail equipment to investors and leased them back, with AIG providing $1 billion in loans to MTA.

Under a clause in the agreement, MTA now must find another company to fund its deals or pay back the investors hundreds of millions of dollars.

MTA's chief financial officer, Terry Matsumoto, says the transit agency will have to cut service if officials fail to negotiate new deals.

To compound the matter, the agency recently lost $133 million in state funds.

(© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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