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Mitchell L Moss' very strange argument
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In an NYT Op/Ed Mitchell L Moss essentially argues that we should tear up the law of contract: indeed, obviate the rule of law itself.
Don't worry too much about the details here: leasebacks and tax advantages are all so boring. The important point is that a series of contracts were undertaken, willingly, by the transit agencies across the country. Part and parcel of these contracts was that they had to be guaranteed: in much the same way that you or I might need someone to sign off on our car note.
As a result of the crash those guarantees are not worth what they were: just as if our guarantor on our car note had gone bankrupt. The result of this is that the banks who entered into the contracts with the transit agencies are now able to ask for more money from them.
Do note that these contracts were freely entered into: further, that if anyone went to court to try and say that the banks should not have the money then they would lose. So, what is the proposed solution?
A solution exists, however. Senator Robert Menendez, a Democrat from New Jersey, and Representative John Lewis, a Georgia Democrat, have proposed a bill that would levy a 100 percent excise tax on any lump-sum payments demanded by the banks.
Correct, he proposes to use politics to take that money from the banks, money that is rightfully theirs by the law of the land.
There have been any number of horrors committed against the idea of sanctity of contract in recent years in the name of populist rabble rousing so perhaps this is just another minor one to add to the pile. But seriously, tear up the law, retrospectively, just because a few transit authorities don't like the way things have worked out?
