Economy Puerto Rico in Bankruptcy: Oversight Board Proposes To Screw Bondholders In Favor of Pensioners

[Rod1]

I want to go to a strip club with Bernie. Dude would be making it rain all night and pay the tab with someone else's card.

The right has absolutely nothing to complain about Bernie considering how they are managing the budget nowadays.

 

[Rematch]

Their debt is being wiped out...

You're already doing such a fine job taking care of hundreds of thousands of Puerto Ricans, who would be better to be the guardian of such a beautiful island with so much potential after the corrupted scums are forced from office!

Cut 'em loose.

 

[nostradumbass]

The right has absolutely nothing to complain about Bernie considering how they are managing the budget nowadays.

I've said multiple times that I don't like how much Trump is spending and republicans in general are getting a little loose with spending, but let's be honest here, Bernie's entire platform is wild expense after wild expense. The country can't pay for any of the things he's proposed and he wants to do all of them.

 

[MicroBrew]

A U.S. territory would have to meet two of three criteria in order to qualify for the debt relief: be the recipient of major federal disaster assistance, have a population decline of 5 percent over 10 years or have per-capita debt exceeding $15,000.



https://www.cnbc.com/amp/2018/07/25...roduce-bill-that-would-slash-puerto-rico.html

So am I reading this right, that the bolded is the law on the books now?

 

[MicroBrew]

I've said multiple times that I don't like how much Trump is spending and republicans in general are getting a little loose with spending, but let's be honest here, Bernie's entire platform is wild expense after wild expense. The country can't pay for any of the things he's proposed and he wants to do all of them.

We could probably pay for universal healthcare if we cut back on defense spending, slash foreign aid , downsize some bases (W.Europe , South Korea and Japan) .

 

[Arkain2K]

So am I reading this right, that the bolded is the law on the books now?

They just introduced the bill this week, Congress till need to vote on it, and details still could be revised between now until it's passed.

I want to go to a strip club with Bernie. Dude would be making it rain all night and pay the tab with someone else's card.

Trump was among the firsts who suggested that Puerto Rico's debt should be wiped out.

I don't think this bill will have much oppositions from both sides of the isle, actually. I don't mind it either, but only if it comes with profound changes and reforms to make sure that the same decades-old cycle of corruption-bred misery doesn't restart again the day after the debt forgiveness.

 

[BrotherClaudio]

Amazingly, some legislators actually try to do their jobs well.

Lies

 

[Arkain2K]

Congress Ponders Oversight of Puerto Rico Utility Aid
By Michelle Kaske and Ari Natter | July 25, 2018​

​

​

U.S. lawmakers are considering potential legislation that would give the federal government greater oversight of the money that Congress is allocating to Puerto Rico’s bankrupt electric utility, according to a committee aide.

The House Natural Resources Committee is set to discuss the issue Wednesday during a hearing. The potential legislation contradicts Governor Ricardo Rossello’s assertions that the federal government wants to take over and operate the Puerto Rico Electric Power Authority.

Representative Rob Bishop, the committee’s chairman, said the prospect of the federal government taking over the troubled utility was “ridiculous.”

“Congress isn’t going to take over anything,” Bishop, a Utah Republican, told reporters Wednesday in the U.S. Capitol. “Congress wants Prepa to be functional and provide for the benefit of those people.”

The utility is struggling from years of mismanagement, crippling debt and aging infrastructure that was heavily damaged last year by Hurricane Maria. It received federal aid to help rebuild from the storm.

Rather than a complete federal takeover, some lawmakers want legislation that would have a person or entity oversee money that Washington is allocating to the utility. It would also help overhaul the company to make it less subject to local politics, according to the committee aide, who asked not to be identified.

“There is an obvious problem,” Bishop said. “There has to be a solution. Something has to change.”

Federal lawmakers want Prepa to be able to operate without interference from island officials. Rossello earlier this month asked the utility’s board members to resign unless they reduced a $750,000 salary for an incoming chief executive officer. That candidate ended up quitting before starting the job.

The committee plans to discuss how to depoliticize Prepa, the utility’s path to privatization, the need for an independent regulator and a solution to its $9 billion of debt and $3.6 billion in pension obligations, according to a hearing memorandum.

https://www.bloomberg.com/news/arti...o-ponder-oversight-of-puerto-rico-utility-aid

 

[Arkain2K]

Puerto Rico Asks Judge to Force Federal Board to Share Its Power
By Steven Church | July 25, 2018

​

Puerto Rico Governor Ricardo Rossello is seeking to wrest back some of the budgetary authority that was ceded to the fiscal oversight board established by Congress to impose fiscal discipline on the bankrupt island and help pull it out of a long-running debt crisis.

The attorneys for the territory made their plea during final arguments in federal court in San Juan on Constitution Day, a state holiday celebrating Puerto Rico’s constitution. The case has pit elected officials who have lost the power of the government’s purse against a panel of appointed technocrats who have demanded unpopular economic changes.

Each side said the future of the island was at stake, with lawmakers arguing that democratic ideals require more local influence and the board claiming that fiscal disaster looms without painful reforms, like watering down labor laws to encourage businesses to hire and reducing the number of government jobs.

A U.S. law that set up the fiscal board “does not make the board the supreme ruler of Puerto Rico,” Claudio Aliff-Ortiz, a lawyer for the commonwealth’s general assembly said in court. “It does not make the board king of Puerto Rico.”

The case began earlier this month after the Financial Oversight and Management Board for Puerto Rico imposed its own fiscal plan and budget on the commonwealth, prompting Rossello and the legislature to file lawsuits seeking to give them more say in the process.

U.S. District Court Judge Laura Taylor Swain said after Wednesday’s hearing that she would try to quickly rule on the board’s request to dismiss the lawsuits.

Much of Puerto Rico’s closing argument focused on the board’s demand that the legislature repeal a local law, known as Act 80, that protects workers’ jobs. Lawmakers agreed to remove the protections for future workers, but not existing employees.

That demand was necessary to convince investors to return to the island, the board’s lead attorney Martin Bienenstock told Swain.

Congress gave the board control over the territory’s budget and the related, implementing legislation, Bienenstock said. Giving the governor the right to redirect spending would undermine the point of the law, known as Promesa.

But Rossello’s lead attorney, Peter Friedman, argued that trimming the board’s authority does not conflict with Promesa. The board would still be able to impose painful consequences on the government, but only if Rossello spends more than the budget allows, he said.

Creditors are watching the fight closely because it could affect their willingness to accept a recently proposed compromise on how to divide the island’s sales-tax revenue, said Luc Despins, the lawyer for a court-approved committee for unsecured creditors. Last month two court appointed agents reached a deal on how to split billions in sales taxes, a key step forward in the bankruptcy case that triggered a rally in the price of Puerto Rico’s bonds.

Puerto Rico is locked in a battle with creditors after free spending, corruption and a decade-long recession that left it unable to keep paying its $74 billion of debt.

The unsettled question of the board’s power has been a defining theme of the island’s attempts to end its fiscal crisis. Last year, Rossello won a key court battle when Swain rejected the board’s attempt to take control of Puerto Rico’s troubled electric utility, known as Prepa.

Swain said then that Congress had denied the board direct power over Puerto Rico’s government and made its job harder. Congress created a “power-sharing structure that allows for mutual sabotage,” Swain said.

The case is Ricardo Antonio Rossello Nevares V The Financial Oversight and Management Board for Puerto Rico, 18-00080, U.S. Bankruptcy Court, District of Puerto Rico (San Juan)

https://www.bloomberg.com/news/arti...dge-to-force-federal-board-to-share-its-power

 

[Arkain2K]

Bloomberg Opinion: Puerto Rico doesn't need another costly legal battle
July 26, 2018

As the Atlantic hurricane season heats up, Puerto Rico finds itself caught up in a home-brewed storm: a power struggle between its elected government and the federally appointed control board that Congress created to manage the bankrupt island’s public finances. Unless the government makes peace, the losers will be ordinary Puerto Ricans and their fragile hopes of economic recovery.

The fight was sparked when the island government upended a budget compromise earlier this month. In return for restoring budget cuts of $300 million and a bonus for workers targeted by the board, Gov. Ricardo Rossello agreed to push through labor-law reforms designed to lure outside investors. But Puerto Rico’s legislature balked, passing its own budget in defiance of the board’s budget authority. The governor then repudiated his own agreement; he and legislative leaders subsequently filed suit challenging the board’s powers.

These legal challenges are unlikely to succeed. The chairman of the congressional committee that created the board has affirmed its “extensive powers” to enforce compliance with any fiscal plan it approves. Keep in mind that the legislators who are bucking the board helped land Puerto Rico in its current predicament. A recent Government Accountability Office report details the lax financial management and oversight in the legislative and executive branches that yielded all-too-elastic budgets, $70 billion of outstanding debt and $50 billion worth of unfunded pension liabilities.

Consider the reform that the legislators so firmly resist: a repeal of Puerto Rico’s Law 80, which makes it hard for firms to fire workers. Surveys by the World Economic Forum, World Bank and others have found that the onerous labor laws make the island less competitive and keep businesses from investing and hiring. They help explain why Puerto Rico’s labor force participation rate lags that of the rest of the U.S. (42 percent vs. 62 percent). The structural reform the board wants would be a big step in the right direction.

A legal battle against the board can only distract Puerto Rico from its many huge challenges. As the year’s tropical storms and hurricanes start to swirl, some 60,000 homes damaged by Hurricane Maria still have tarpaulins for roofs. Unclaimed cadavers from that disaster and from an ensuing crime wave remain in refrigerated trailers. The island’s battered power utility awaits repairs and privatization.

Perhaps worst of all, the attack on the board’s authority stands to annoy lawmakers in Washington, whose help Puerto Rico badly needs. Congress has already appropriated several billion dollars in disaster assistance and additional funding for Medicaid and food stamps. But most of the recommendations made by a congressional panel to spur economic growth remain unfulfilled. One of the most effective actions Congress could take to help — extending the Earned Income Tax Credit to Puerto Rico — would require a degree of political consensus that the island has yet to foster.

Austerity and reform alone won’t rekindle opportunity in Puerto Rico. Debt forgiveness and investment are also essential. But no progress is possible until the commonwealth appraises its own shortcomings and demonstrates the discipline to transcend them.

https://www.omaha.com/opinion/bloom...cle_19549b67-a358-55bc-a158-5abde15aa22e.html

 

[superpunch]

We could probably pay for universal healthcare if we cut back on defense spending, slash foreign aid , downsize some bases (W.Europe , South Korea and Japan) .

That's just ridiculous. We already spend the second most government money on healthcare per citizen in the world! Right after Norway. We already spend way more than enough government money on healthcare for universal healthcare.

We don't need to cut defense spending at all to do it. As a matter of fact, we could use the government spending savings we get by switching over to universal healthcare to spend more money our military.

 

[BrotherClaudio]

Dear Wells Fargo, you greedy vultures, erase my credit card debt you fucks!!

 

[cincymma79]

member when paying off pr debt was racist? pepperridge farm remember

 

[JudoThrowFiasco]

PR knew their advantageous tax benefits to attract new investment had a sunshine clause in it -- they just reminded myopic and didn't prepare for that. Yes, their people fled taking talent with them but these are all scenarios they should've seen coming

 

[surrealworlds]

Ive always been of the mind that the U.S. "territories" are dumb ideas anyways. Either make them states with full state rights and therefore access to federal aid,guidance,etc. OR cut them loose and let them deal with their own problems as an independent country. Maybe give them a stimulous package to send them on their way though.
I just dont understand this half in half out shit. They are poorly managed and therefore find themselves in horrible debt, so we will not help them because its their own fault BUT they are U.S. citizens and should have the rights of U.S. citizens!
Make up your minds!

 

[Trotsky]

I think you can make a case that a relief bill is in order but I just don’t get Sander’s need to vilify someone in his call (and I’m no great fan of the finance sector in general either). It’s almost like a verbal tick

I mean....can you speak about the Puerto Rican debt vultures in a positive way?

These are some of the most insidious, amoral predators in existence. They're lucky we're only canceling their odious debt interests and not escorting them out of town on pikes.

 

[panamaican]

So bankruptcy. Skipping the hue and cry for a moment...

Is there a better solution?

 

[panamaican]

Blaming investors on the open bond market for all of Puerto Rico's misery, now THAT's disingenuous.

It's universally acknowledged that Puerto Rico is fucked because the democratically-elected Puerto Rican government failed to do ANYTHING meaningful to diversify their economy back when their coffers was flushed with cash, such as transitioning that beautiful island from a booming factory town to a regional tourism powerhouse that it should be, before the Federal tax incentives expires (as expected), the big manufacturers pulled out (as expected), all the now-unemployed young people have no choice but to flee to the main land to find work (as expected), and the island's eventual bankruptcy (definitely expected).

None of that came as a surprise for anyone. They all happened gradually and expectedly, like an extremely slow-moving trainwreck. In fact, some would say that the incompetent and corrupt Puerto Rican government did absolutely nothing was rather expected as well.

For decades now, the Puerto Rican people are perfectly okay with electing politicians that had zero plans for their future besides making themselves rich while kicking the can further down the road by borrowing more and more money than ever before from bond investors on Wall Street to fill their budget each year, the same investors now being vilified by Senators Warren and Sanders as "vultures".

What pisses me off the most about all this talk about Puerto Rico is that they rarely include a plan to actually fix the underlying problems that drove them to the cliff, even though EVERYONE knows what the problems were, because it's so much easier to blame everyone else (or perhaps scapegoating century-old legislation that applies to all U.S ports like the Jones Act), except those who are truly responsible for their demise.

I find this an amusing post because it's exactly what I've been saying if we replace "Puerto Rico" with "American Midwest" in most circumstances.

 

[Gandhi]

I didn't disagree with that, but don't you think it could be that AND some capitalist pigs taking advantage of a poor and corrupt government for their own financial gain in a market that is essentially not regulated compared to ours?

The capitalist pig is not forcing a govt to borrow. It is silly that we are treating govt's like individuals here. A individual will be taken advantage of by teaser rates, get loaded with debt, get bankrupted, and absent regulation, be sold off into slavery or debtor prison.

A gov't can say "fuck you" we are not paying and the lender can do nothing, like Russia did with Long Term Capital Management.

The real issue here is that much of PR's debt is unable to be put under a bankruptcy process whereby it can orderly restructure its debt. About half of its debt is in utilities which I think can go BK in a process similar to a municipality. The rest can't under current law and that should change.

The best response to high risk / high cost lending is to allow the risk to come to fruition (in non payment). PR has an incentive to work out something reasonable as if they fuck the lender to much they will have a hell of time borrowing again.

EDIT I should clarify a full BK process not a special case one they did in 2015

 

[Gandhi]

So bankruptcy. Skipping the hue and cry for a moment...

Is there a better solution?

Sure if they were allowed to