The MTA Needs Federal Aid

In n ormal times, the statement that New York State’s Metropolitan Transportation Authority put out early Wednesday would be, by itself, a seismic event: the MTA is telling bondholders that the coronavirus crisis imperils its ability to pay its debt. That’s bad enough, and the MTA is going to need massive federal aid just to keep municipal-bond markets from cratering. But the longer-term prospect is even worse: that even after the city, nation, and world have come out of quarantine, New York will be left with a crippled transit system that hobbles any economic recovery.

The MTA has issued what’s called a “material event” notice. In the terse announcement, it told investors in its $45 billion worth of municipal bonds that coronavirus is having “clearly severe” impacts on its finances, with the situation deteriorating daily. The issue isn’t a run-of-the-mill recession, when the MTA would normally cut back service and ask the state legislature for aid to paper over a deficit. Rather, it’s an acute cash-flow problem. Read Full Article »