"Congress should dissolve the Financial Oversight and Management Board in Puerto Rico and create a new one to ensure pensions are paid, investments are made, and creditors are treated properly."
00:00 💸 Puerto Rico is functionally bankrupt and has been corrupted, with stakeholders and bondholders needing consultancy from the Puerto Rico Clearinghouse.
06:48 🤔 The Financial Oversight and Management Board has control over Puerto Rico's finances, with Congress intervening with Promesa and an estimated cost of 2.4 billion dollars.
14:49 🤔 Puerto Rico's bankruptcy process has been corrupted, with bondholders receiving only 4 cents on the dollar while public employees received bonuses totaling $475 million, and the Supreme Court striking down Puerto Rico's restructuring law.
24:09 🤔 Congress has not defined the cause for the board members, and McKinsey's conflicts of interest raise questions of backroom dealing in Puerto Rico's bankruptcy process.
37:58 🔎 A motion for Discovery has been filed to investigate the awarding of a billion two contract to a consortium of Canadian firms and a Houston company, and the restructuring of Puerto Rico's electric utility during bankruptcy.
44:49 🤔 Congress should dissolve the board in Puerto Rico and create a new one to implement best practices for transparency and open systems while ensuring pensions are paid and investments are made.
54:58 🤔 Puerto Rico has failed to meet Congress' benchmark of treating creditors properly and getting market access, while journalists are using a database to expose rogue corporations and the government is giving out over $21 billion in tax incentives annually.
01:04:23 🤔 Congress is paying attention to the conversation, hoping Senator Grassley will take action.
- Puerto Rico is functionally bankrupt and has been corrupted, with stakeholders and bondholders needing consultancy from the Puerto Rico Clearinghouse.
- In 1898, the United States invaded Puerto Rico and, with the help of Roosevelt's Operation Bootstrap, successfully industrialized the island and created a tripartite structure of government.
- In 2016, Congress stepped in to address Puerto Rico's inability to pay its debt due to deficits, lack of tax revenue, and lack of federal income tax.
- Puerto Rico was consistently running deficits and doing nothing to correct them, leading to an attack on the speaker and a Barons article nuking the bonds in 2014.
- In 2012, banks had 19 classes a day and some weaker trading occurred during that period.
06:48 🤔 The Financial Oversight and Management Board has control over Puerto Rico's finances, with Congress intervening with Promesa and an estimated cost of 2.4 billion dollars.
- The federal government intervened in Puerto Rico's debt problems with Promesa, despite some Republicans wanting to let it all collapse.
- An oversight board appointed by the president with nominations from House and Senate leaders controls the budget and five-year plan for expenses and revenues.
- The Financial Oversight and Management Board (FOMB) essentially has control over Puerto Rico's finances, similar to the way New York City and the District of Columbia have been intervened.
- The Congressional Budget Office estimated the cost of restructuring Puerto Rico's debt and pension liability to be around 2.4 billion dollars.
- Congress incorporated Pro Mesa, a consensual restructuring framework, into Title VI of the Promesa Act, but creditors have been unable to negotiate due to the board's lack of interest in the requirements of the statute.
- Puerto Rico has plenty of money but is unable to access the market at reasonable rates due to the board's regulations.
14:49 🤔 Puerto Rico's bankruptcy process has been corrupted, with bondholders receiving only 4 cents on the dollar while public employees received bonuses totaling $475 million, and the Supreme Court striking down Puerto Rico's restructuring law.
- Puerto Rico is multiple times more conservative than other markets and has not been rated by any rating agency in over five years due to corruption.
- The Puerto Rico bankruptcy process has been corrupted, with the oversight board announcing bonuses of 475 million dollars to government employees despite the lack of funds.
- Bondholders received 4 cents on the dollar while public employees received bonuses totaling $475 million.
- With the change in control of the House of Representatives, Republican supervision of the Puerto Rican board has decreased, while Democrats are less interested in supervision.
- Puerto Rico has an institutional imperative to keep the board in place, despite the devastating hurricane and COVID-19, to access the 80 billion dollars in federal aid for reconstruction.
- Litigation has been ongoing since 2014, with the Supreme Court striking down Puerto Rico's restructuring law, and the bankruptcy court's docket now at 22,000, creating a feeding trough for attorneys.
24:09 🤔 Congress has not defined the cause for the board members, and McKinsey's conflicts of interest raise questions of backroom dealing in Puerto Rico's bankruptcy process.
- The board overseeing Puerto Rico's bankruptcy has refused to identify essential services and make the government leaner and more efficient, instead focusing on beating up creditors and bondholders.
- David Skeel's spiritualist view of bankruptcy law disregards the primary principles of the process, which is to fairly divide the debtor's assets according to their capacity to pay.
- The bond insurer forced disclosure of physical assets and pension liabilities of the Puerto Rican government, which had been obscured and bloated with corruption.
- Congress is the parent in this situation, but it has not defined the cause for the board members and the process has become too complicated for most people to keep up with.
- McKinsey, the primary consultant to the oversight board, has direct conflicts of interest and has represented parties with adverse interests in restructurings, raising questions of backroom dealing.
- Chinese walls are formally enforced but informally may not be effective.
37:58 🔎 A motion for Discovery has been filed to investigate the awarding of a billion two contract to a consortium of Canadian firms and a Houston company, and the restructuring of Puerto Rico's electric utility during bankruptcy.
- A corporate attorney in Puerto Rico has filed a motion for Discovery to uncover conflicts between McKinsey and two Canadian companies hired to manage the power transmission and grid in Puerto Rico.
- A consortium of three Canadian firms and a Houston company won a billion two contract by underbidding other firms by 30 million, despite having limited experience operating electric systems.
- Lumen's takeover of the grid resulted in worse performance than the public system it replaced, warranting further investigation into the decision-making process.
- 2000 electric utility employees were given no-show jobs in the central government, with their pensions handled separately from the Commonwealth during the bankruptcy process.
- Congress is unlikely to approve the Puerto Rican model of restructuring for other states with significant unfunded pension liabilities due to its treatment of creditors.
- Congress must decide whether to end the approach in a set amount of time or let the board decide.
44:49 🤔 Congress should dissolve the board in Puerto Rico and create a new one to implement best practices for transparency and open systems while ensuring pensions are paid and investments are made.
- Government employees need to have sufficient capacity to keep track of the government's finances once support is removed.
- The board should have taken full control and made all information public to increase transparency and build confidence in the Puerto Rican government.
- Congress should create a new board to implement best practices for transparency and open systems in Puerto Rico.
- The restructuring agreements blessed by the court contain critical boundaries for running a government, including ensuring pensions are paid.
- Congress should dissolve the board in Puerto Rico, as it is not contributing much and is instead spending time litigating and attacking people in court.
- Despite its attractive tax regime and US legal framework, Puerto Rico has not seen the influx of investment and pharmaceutical manufacturing it should have.
54:58 🤔 Puerto Rico has failed to meet Congress' benchmark of treating creditors properly and getting market access, while journalists are using a database to expose rogue corporations and the government is giving out over $21 billion in tax incentives annually.
- The board's benchmark for evaluating their work is how hard they hit bondholders, but Congress imposed a benchmark of treating creditors properly and getting market access, which they have failed to do.
- Journalists in Puerto Rico are using a database of government contracts to expose rogue corporations and prevent billions of dollars from going out the back door.
- The government gives out over $21 billion in tax incentives annually, providing investors with significant advantages if they are connected to the right people.
- Puerto Rico has a bilingual workforce, open trade, and the U.S legal system, but it is still a long way from standing on its own two feet.
- The Senate's preference to benefit government employees with cash, salaries, benefits, and pensions, and the court rulings related to special Revenue debt, have caused creditors to receive low recoveries and delayed the process of restoring creditworthiness.
- Municipal markets are conservative and require investment-grade ratings, so cash is not needed to restore market access.
01:04:23 🤔 Congress is paying attention to the conversation, hoping Senator Grassley will take action.
- Congress has formed and may take note of the conversation, with the hope that Senator Grassley will do something about it.
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Their goal is no less than the restoration of America’s military and economic preeminence on the global stage.
Arcing from Manhattan’s finest apartments to Washington, D.C., from Middle Eastern war zones to private European bank vaults, Jay Newman’s Undermoney is a filled with jaw-dropping action. Brilliantly rendered with details only a sophisticated financial insider knows, it reveals the secret intentions and savage deeds of the world’s richest people.
More information: www.jaynewman.com
