April 30, 2009

Quit whining. Do your job.

Hank Gilbert has a great post over at BOR regarding what's going on in the Lege on transportation.

HB 300 is out of committee and bound for calenders, then the floor. This is the TXDOT sunset bill which became an omnibus transportation bill with all the bells and whistles that everyone wanted. That's what Republicans do when they want a really nasty piece of constituent unfriendly legislation to pass... they give all the members a little something they want, then attach it to the bill. The members, when called on the carpet about it, then whine about how it had this one really good thing even though it had some really bad things in it. This is, of course, an admission of their wholesale failure to do their jobs to adequately fund transportation in this state. I'd rather they just get to work and fix the mess.

This, my friends, is some bullshit. NONE OF YOU LISTENED TO THE RECO'S OF THE DAMN SUNSET COMMITTEE. Gone is the statewide elected commissioner, replaced with yet another appointed commission. Even still, the really nasty stuff is coming out of the Senate, courtesy of the fatnesses, Sen. Carona and Sen. Nichols. Nichols, you may remember, was front and center with 39% during his rambling 10th Amendment speech. You can bet that's going to be a picture in some collateral sent out to his constituents that are supporting KBH.

On the Senate side, things have gone from bad to worse with transportation bill after bill being passed, none of them good and none of them get us any close to a rational solution. Many take us back. For instance, an amendment Sen. Nichols authored basically removes all oversight from the comprehensive development agreements that create the public private partnerships. See, right now CDA's are subject to oversight by the AG's office, Comptroller and an independent auditor. Nichols wants to remove all that bothersome crap and leave it all to TXDOT, the agency that made a ONE BILLION DOLLAR accounting error.

And then there's the transportation bank which will be used to credit enhance debt issued by the toll authorities. Read that last line one more time, then read this on AIG. Yeah, this motherfucker is going to leave our noses open for BILLIONS if not HUNDREDS OF BILLIONS. From Texas Monthly...

Subject to constitutional limitations, a transportation revolving fund can be used to provide loans or credit enhancement, or to serve as a reserve fund for debt financing or the cost of operation and maintenance. This would allow public and private entities, particularly local tolling authorities, to mitigate certain project financial risks which limit access to the capital markets, or to access additional financing for needed projects.

Just so you know, a 'credit enhancement' in the fixed income world is how you turn a really bad credit that's likely to default into a GORGEOUS prime credit that's likely to pay out perfectly. Sounds like magic, right? Nah, it's insurance. Let's say you have bad credit but your dad has great credit. He cosigns on a loan for you, thereby adding a credit enhancement to the note that insures payment of it... he's saying he'll pay if you don't. Voila! Instant credit enhancement for the creditor holding your loan.

This is, in effect, what this bank will be doing. The problem is, the enhancements won't be limited to true loss, nor will they be limited to face amount. To sell this junk without a tax backing it up, the bank will have to really juice the enhancement which will basically turn them into abnormal lottery tickets which will make the debt being issued to finance the toll roads VERY attractive.

Yeah, you read it right, abnormal lottery tickets. Unlike regular lottery tickets, these will pay, probably if the bonds don't even default... we'll have to see when the first tranche is sold. They'll pay using our tax dollars. Now, if you want a sweetheart deal like the bond investors and toll developers will be getting, just make your check payable to the Campaign to Re-elect Sen. Nichols and Sen. Carona.

Nichols, for his part, has received more money from toll road interests than any other Senator, just in case you thought I was being unnecessarily harsh. And, just FYI, NO SENATOR VOTED AGAINST THIS. Not a single Democrat.

But don't fear, boys and girls, the House D's may have some fun with all this.

Posted by mcblogger at April 30, 2009 02:11 PM

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