Tuesday, November 21, 2006

Pubbie Porker

The Porker of the Month

(ta-da!!) is John Thune (R), S Dakota.

Not only did he secure a $2BN+ loan guarantee for a former lobbying client of his, he also increased a Federal Agency budget to provide for his pals.

The loan guarantee from the Federal Railroad Administration (FRA) would allow the Dakota, Minnesota, and Eastern Railroad (DM&E) to expand and improve a rail line that is used primarily to transport coal from Wyoming to Minnesota. In apparent anticipation of the loan, Sen. Thune was instrumental in increasing the FRA’s loan guarantee authority from $3.5 billion to $35 billion in the 2005 Safe, Accountable, Flexible, and Efficient Transportation Equity Act. DM&E paid Thune $220,000 in 2003 and 2004 to lobby for the loan before his election to the Senate.

There is a slight problem:

According to BearingPoint (a strategic consulting firm), the loan would require an annual payment of $246 million on top of the $15 million from another loan. Even if the rail upgrade increases DM&E’s current annual revenue of $200 million, the deal presents a poor credit risk to taxpayers, who will be forced to foot the bill if the company defaults. A senior manager at BearingPoint stated, “This loan finances a project with many financial uncertainties, ultimately calling into question whether or not DM&E can repay the loan.”

Just for comparison: this is a $2.2BN loan guarantee.

Chrysler only got $1.5BN in 1980.

HT: Captain's Quarters

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