AIG's woes put public transit in trouble with banks

CNN reports:

The ongoing financial crisis could put public transit systems nationwide at risk of defaulting on more than $2 billion in loans backed by troubled insurer American International Group, an industry advocacy group said Thursday.

The problem stems from "lease-back transactions" -- made from the early 1990s through 2003 -- in which transit agencies sold equipment to banks and then leased them back.

"Thirty-one transit agencies nationwide used these leverage lease actions to finance assets," said Rob Healy, vice president of government affairs for the advocacy group American Public Transportation Association.

You'll want to read this one.Local governments gone wild.Who's going to bailout local taxpayers?