By: Ilana Siyance
Sen. Chuck Schumer is urging the Federal Reserve to buy up debt from the Metropolitan Transportation Authority. The Senior Senator from New York represented the MTA on Tuesday in a letter to Fed Chairman Jerome Powell. The fed’s program entitled, Municipal Liquidity Facility (MLF), is purchasing $500 billion worth of debt directly from cities and states to help aid finances following the shutdown caused by the pandemic. As reported by Crain’s NY, Sen. Schumer is asking that the program include the MTA in its purchases.
“The MTA and its heroic staff have answered the call of duty—and in some cases, sacrificed their lives—to transport essential workers,” Schumer wrote in the letter. “The Federal Reserve should seek to similarly match this call and provide the critical resources and support necessary to help sustain one of the most essential transit authorities in the country.”
The Senate Minority Leader is making the case that the city’s subway, bus and commuter rail systems will be seen as an integral part of New York’s economic revitalization following the COVID-19 pandemic. The Treasury Department, which manages the MLF together with the Fed, reported supports the MTA’s inclusions, as per a source close to Schumer. If the Fed does include the MTA, the country’s largest transportation network will have their revenue-backed bonds eligible for the MLF.
Faced with NYC’s shutdown, the MTA has experienced a 90% drop in ridership, which has led to a shortfall of close to $8.5 billion. Being included in the Fed’s MLF program would inject the emergency financing that the agency desperately needs, so that it doesn’t need to tap into its last-resort funds, according to Schumer’s office.
In May, New York debt got some respite notwithstanding the hefty budgetary losses for the city and state levels, due to dwindling tax revenue. Still, last month investors jumped in to buy up over a billion dollars in tax-secured debt from New York City’s Transitional Finance Authority. Like the TFA, the MTA issues debt independent of the city and state. The MTA is actually one of the most successful municipal issuers, Schumer said.
At the end of March, the MTA’s transportation revenue bonds received a downgrade from S&P Global Ratings. S&P lowered the issuer’s rating from A down to A-minus. MTA Chairman and CEO Patrick Foye called this the authority’s “biggest liquidity crisis ever”.
