Transit authorities seek aid in avoiding AIG fees

Transit authorities, which are now facing about $4 billion in fees for AIG-backed tax shelters, are reaching out to the government for help, according to The New York Times.
NOV 05, 2008
By  Bloomberg
Transit authorities, which are now facing about $4 billion in fees for AIG-backed tax shelters, are reaching out to the government for help, according to The New York Times. The affected transit authorities, which include agencies in New York, Los Angeles and Chicago, used lease-in/lease-out or sale-in/lease-out tax shelters to sell infrastructure items to banks, which then lease them back to the authorities, according to the Times. In the deal, the corporations receive a tax break, and the authorities get cash flow. These transactions were backed by American International Group Inc. of New York, which was saved by the government in September, the Times said. But now the American Public Transportation Association, a Washington lobbying group for the transit authorities, is asking the Department of Transportation to encourage Henry Paulson, secretary of the Treasury, and Ben Bernanke, Federal Reserve Board chairman, to have the government back the transactions in AIG’s stead. With the government’s backing, the authorities can avoid paying $4 billion in early-termination fees to AIG and other banks and insurers in the deals. Banks in the deals want the money because the insurer’s credit ratings were lowered, the Times said. The shelters — which have cost the Treasury an estimated $34 billion in otherwise-levied taxes — have been under scrutiny by the Internal Revenue Service and have even been banned by the tax agency, which said it never considered them valid for deductions, according to the Times.

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.