This post was written by Josh G. and originally posted on Occupy Boston’s site. Video of the presentation is available here, in 4 parts.
On March 7, Occupy Somerville hosted a fascinating forum with Jeremy Thompson of MassUniting. “Targeting the Most Vulnerable: How Wall Street is Hurting T Riders (Especially Seniors, Students and the Disabled)” made clear exactly who is being forced to bear the brunt of the MBTA’s proposals to slash service and raise fares – and, just as importantly, who is not being asked to pay at all.
After describing the MBTA’s dire fiscal situation ($5.2 billion of debt; $440 million in annual debt service; and a $160 million deficit for the coming year), Thompson outlined the MBTA’s two proposals to balance its budget for next year with a mix of devastating layoffs, service cuts, and fare increases. Thompson conclusively demonstrated that, under either proposal, it is those who can afford it the least who be asked to pay the most. For example, under the MBTA’s Scenario 1, the top 8 fare hikes hit seniors, students and the disabled:
|THE RIDE – Premium Service Area
|Senior/TAP Local Bus
|Senior/TAP Rapid Transit
|THE RIDE – ADA Service Area
|Student Local Bus
|Student Rapid Transit
Similarly, under the MBTA’s Scenario 2, seniors, students and the disabled will pay the six biggest fare increases. Thompson also noted that the proposed service cuts will disproportionately affect those who either cannot afford a car or are physically unable to drive.
The most illuminating part of Thompson’s presentation was how big Wall Street banks are profiting off the MBTA’s fiscal problems. As the MBTA’s debt mounted, banks encouraged the T to enter into “Interest Rate Swaps,” which are essentially bets on whether interest rates will go up or down. Specifically, the banks offered the MBTA a series of variable rate payments to cover some of its debt payments while the MBTA agreed to pay the banks at a fixed rate. But variable interest rates have been near 0% since the bailouts of 2008 while the fixed rates that the T pays the banks are locked in at 3% to 5.6%. As of February, the T was paying the banks, on average, 4.47% interest while getting back just 0.2% for these swaps. To make matters worse, the MBTA is not allowed to renegotiate these horrible deals unless it pays an early termination fees of $103 million.
As a result of these bad bets, the T is paying the banks $26 million this year and is on the hook for another $287 million through 2031. Thompson was quick to point out that $26 million wouldn’t come close to closing this year’s deficit, but it’s nothing to sneeze at, either. By comparison, the drastic fare increases for THE RIDE outlined above will only raise $18.7 million. The money the MBTA is paying these banks is enough to offset THE RIDE fare increases and save weekend service on the E Line and Mattapan trolley and save late night and weekend commuter rail service.
And which banks is the MBTA paying off at the expense of its riders? The very same banks we bailed out with our tax dollars. Consider:
- The MBTA is losing $9 million a year to UBS on bad swap deals and is on the hook for another $97 million in the future. UBS received a $77 billion taxpayer bailout.
- The MBTA is losing $8.9 million a year to JPMorgan Chase on bad swap deals and is on the hook for another $115 million in the future. JPMorgan Chase received a $100 billion taxpayer bailout.
- The MBTA is losing $8.3 million a year to UBS on bad swap deals and is on the hook for another $75 million in the future. UBS received a $66 billion taxpayer bailout.
While the MBTA is proposing “solutions” that would devastate T-riders, workers, and the environment, they have not, according to Thompson, approached the banks about renegotiating – or canceling – these swaps. Thompson encouraged Occupiers, as a concrete way to stave off fare hikes and service cuts, to pressure both the MBTA and the banks to “Stop the Swaps.”
After the presentation, attendees split into small groups to discuss possible actions based on what they learned. All in all, it was an informative evening that should spur some pretty exciting and creative actions in the coming weeks as part of the fight to save the T.