What Was the Municipal Assistance Corporation (MAC)?
The Municipal Assistance Corporation (MAC) was a public-private corporation created by the state of New York in 1975 to aid New York City in an extreme financial crisis. The city had exhausted all lending organizations and was no longer able to have any debt issuances underwritten. The MAC was authorized to sell bonds issued by the city to enable cash flow to return to the city's government.
The MAC closed down in 2008, having fulfilled its stated purpose.
- The Municipal Assistance Corporation for the City of New York (MAC) was established through State legislation on June 10, 1975, to address the New York City government's severe fiscal crisis.
- MAC's creation and success were due to the combined efforts of public and private institutions and individuals dedicated to restoring the City's fiscal health.
- In a unique undertaking, those with competing financial interests and historically adversarial relationships came together to restore the City to a firm financial footing.
- The MAC ceased to exist in 2008.
Understanding the Municipal Assistance Corporation
In the spring of 1975, the City was unable to pay its bills, a default on outstanding debt was likely, and the specter of bankruptcy was very real. The Corporation was born of a recommendation to Governor Hugh L. Carey made by a special panel comprised of Simon H. Rifkind, Felix G. Rohatyn, Richard M. Shinn, and Donald B. Smiley. MAC had a Board of Directors consisting of nine private citizens and was endowed with the authority to borrow billions backed by State revenue and to exercise specific policing powers over City fiscal practices.
The state stepped in to avoid a breakdown of services in the nation's largest city, which had mismanaged its finances to the point where it was on the brink of being unable to pay government employees. The state also advanced the city with additional funds to assist the revamping of their financial state and tide them over until enough of the new bonds could be issued.
The MAC was closed in 2008 after the last $10 billion worth of bonds were paid off. New York City has come a long way since the dark days of the 1970s. In the years that followed the MAC's closure, NYC's revenue has remained stable, although the city was still grappling with a pile of debt—its long-term obligations including pensions, compensated absences for municipal employees (accrued sick and vacation leave payable at retirement), and other post-employment benefits was roughly equal to its bonded debt.
The MAC's Impact
"MAC’s creation and success were due to the combined efforts of public and private institutions and individuals dedicated to restoring the City’s fiscal health. In a unique undertaking, those with competing financial interests and historically adversarial relationships came together to restore the City to a firm financial footing," according to the Baruch archive.
When the city asked the federal government for help, then-President Gerald Ford demurred, prompting the New York Daily News to print the famous front-page headline: "Ford to City: Drop Dead." Although Ford never uttered those words, they summed up the feelings of many New Yorkers, who felt abandoned by all levels of government as their city crumbled.