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| Re: MTA Bonds - NYS Takes Its Cut Off the Top (1154236) | |||
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Re: MTA Bonds - NYS Takes Its Cut Off the Top |
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Posted by WillD on Wed May 2 13:15:03 2012, in response to Re: MTA Bonds - NYS Takes Its Cut Off the Top, posted by TCO on Wed May 2 13:07:48 2012. That's because as a public benefit corporation with bonding powers, if they were to generate a true surplus in one year that surplus must be applied to paying down the principle on their bonds. That is the worst possible outcome for the holders of those bonds, who now get rich on the MTA's debt service in both coupon payments and reissuing bonds to cover old debts. Every public authority able to make bonds has a perverse incentive to not generate a profit and to find avenues into which they can dispose of surpluses before they have to apply them to their debt. It really should be called what it is: government subsidization of the entire financial services sector. |
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