Friday, July 18, 2014

Puerto Rico Recovery Act May Be Struck Down | Complete loss of credibility - By CARLOS ROMERO BARCELÓ | PR government says it may not be able to honor all of its obligations

» Puerto Rico Recovery Act May Be Struck Down - ValueWalk
18/07/14 11:11 from puerto rico - Google News
Puerto Rico Recovery Act May Be Struck Down ValueWalk Assured Guaranty Ltd. (NYSE:AGO), MBIA Inc. (NYSE:MBI) and Ambac Financial Group, Inc. (NASDAQ:AMBC) have exposures of $2.6 billion, $2.5 billion and $897.9 million respectively to va...

Puerto Rico Recovery Act May Be Struck Down

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The Act likely violates the Takings Clause and may be held to be unconstitutional
Assured Guaranty Ltd. (NYSE:AGO), MBIA Inc. (NYSE:MBI) and Ambac Financial Group, Inc. (NASDAQ:AMBChave exposures of $2.6 billion,  $2.5 billion and $897.9 million respectively to various Puerto Rico entities that are eligible to restructure under Puerto Rico’s Public Corporations Debt Enforcement and Recovery Act (the Act).
(Read ourarticle on Puerto Rico’s Public Corporations Debt Enforcement and Recovery Act here.)
The Act has been challenged in Puerto Rico’s federal district court by the Franklin and Oppenheimer Funds (Franklin California Tax-Free Trust for the Franklin California Intermediate Term Tax Free Income Fund, et al. v. The Commonwealth of Puerto Rico” Case. No. 14-1518) wherein the plaintiffs seek a declaration that the Act enacted by the Commonwealth of Puerto Rico violated multiple provisions of the United States Constitution.

The Takings Clause

BTIG’s Mark Palmer writes on his blog (“Assured Guaranty, MBIA, Ambac Financial Group: What is the “Takings Clause” and Why Should It Matter to Investors in AGO, MBI and AMBC Concerned About the Impact of Puerto Rico’s Debt Enforcement Act?” July 17, 2014) clarifying the significance of the Takings Clause, the last clause of the Fifth Amendment to the US Constitution, and how this clause could be instrumental in deciding the constitutionality of the Act.
It has been held by the Supreme Court that the federal government and each state has the power ofeminent domain—the power to take private property for “public use”. The Takings Clause limits this power by requiring that “just compensation” be paid if private property is taken for public use.
The Franklin and Oppenheimer Funds, in their complaint above, have objected to Section 322 ( c ) of the Act which enables the petitioner, after court authorization, to “the obtaining or credit or the incurring of debt secured by a senior or equal lien on the petitioner’s property that is subject to a lien.”
According to the Funds, this would constitute a taking in violation of the Takings Clause because it would enable the creation of a superior lien on already liened property without paying compensation to the lienholders.
It may be noted that there could be other constitutional infirmities in the Act, but the alleged violation of the Takings Clause is the most serious, and the one most likely to succeed in a constitutional challenge.

Puerto Rico authorities put up a determined front, however

Regardless, in a webcast yesterday, Puerto Rico has asserted the legality of the Act and its determination to defend it – see the yellow shaded portion in the slide below.
Recovery-Act2-From-webcast-presentation

The Commonwealth’s arguments

In any case, Puerto Rico may well have anticipated these challenges. According to an alert dated July 16 by Orrick, Herrington & Sutcliffe LLP, the Commonwealth’s arguments for the constitutionality of the Act, as per the Senate bill, run as follows:
“The Commonwealth has the police power to enact orderly debt enforcement and recovery statutes when facing an economic emergency, based on the power conferred on the Commonwealth under the Commonwealth’s constitution and enabling statutes. The Commonwealth asserts that it may enact its own laws, as long as the law does not conflict with the Commonwealth’s constitution, the Constitution of the United States or applicable federal law. The Commonwealth asserts that the debt enforcement act is constitutional because the United States Supreme Court has held that states may enact their own laws for entities Congress has not rendered eligible under applicable federal law.”

Puerto Rico to respond on July 22

“Puerto Rico is slated to respond to the bond funds’ lawsuit on July 22, a response that almost certainly will include a motion to dismiss and may address some of the funds’ arguments,” says BTIG’s Palmer.
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Complete loss of credibility

By : CARLOS ROMERO BARCELÓ
Edition: July 17, 2014 | Volume: 42 | No: 27

Two of the most important attributes that a chief executive must have, either in private enterprise or government, are credibility and fairness. A president, prime minister, governor, mayor or any leader who loses his credibility will also be driven out of office. If he acts unfairly with the public and loses his credibility, this person will be driven out of office even faster. A leader without credibility and who acts unfairly with those he pretends to lead will definitely lose all his followers.
On the other hand, a leader who strives to be properly informed and tell his people the truth, even when it hurts, and who acts with a sense of justice toward all his people, will be trusted and people will be much more likely to follow his lead.

PR government says it may not be able to honor all of its obligations

By CB Online Staff


The Puerto Rico government may be unable to honor all of its obligations as they come due as it faces a number of fiscal and economic challenges and its liquidity has been hit by a flood of recent credit downgrades, according to a new report released by the Government Development Bank on Friday.

Thursday, July 17, 2014

New commander takes helm at Coast Guard Sector San Juan

Photo: N/A, License: N/A, Created: 2014:07:15 11:03:48

New commander takes helm at Coast Guard Sector San Juan - News

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Capt. Robert Warren, right, assumes command of Sector San Juan as he salutes Rear Adm. Jake Korn, commander of the Coast Guard's Seventh District, after Capt. Drew Pearson relinquished command of the unit during a ceremony Tuesday at Coast Guard Sector San Juan.
Daily News Staff)
Published: July 16, 2014
A new commander took over Coast Guard Sector San Juan - which oversees Coast Guard personnel for the U.S. Virgin Islands and Puerto Rico - during a change-of-command ceremony Tuesday at the Coast Guard base in Old San Juan, Puerto Rico.
Rear Adm. Jake Korn, Commander of the Coast Guard's Seventh District, presided over the ceremony in which Capt. Robert Warren assumed command of Sector San Juan, replacing Capt. Drew Pearson, who retired from the Coast Guard after completing 30 years of service.
Prior to assuming his new command, Warren completed a tour at the Joint Chiefs of Staff's Strategic Plans and Policy Directorate in the Pentagon, where he supported and represented the chairman on Maritime Homeland Defense strategy and policy issues.
"I am truly honored to have been selected to lead and serve alongside U.S. Coast Guard forces in Puerto Rico and the U.S. Virgin Islands," Warren said in a statement issued Tuesday. "I look forward to working with the men and women of Sector San Juan and with our partners from local and federal law enforcement, emergency response agencies, and maritime industry to further strengthen maritime safety and security in the region. I am excited to be back in the Caribbean with my family, where we look forward to sharing once more in the rich culture of Puerto Rico and the U.S. Virgin Islands."
Pearson, who was awarded the Legion of Merit for his three-year tour as commander of Sector San Juan, is moving to North Carolina, where he will assume responsibilities as the new Director for Emergency Management for Dare County.
During Pearson's command, Coast Guard Sector San Juan interacted with governments of 18 island nations during 200 search-and-rescue cases, saved 170 lives, assisted 3,600 mariners and salvaged $41 million dollars in property, according to the Coast Guard.
Also during Pearson's tenure, Operation Caribbean Guard, which countered the increase in drug ventures into Puerto Rico and the U.S. Virgin Islands, resulted in the interdiction and seizure of approximately 25,714 kilograms of drug contraband, 972 weapons and $15.2 million.
Sector San Juan, headquartered in La Puntilla, Old San Juan, covers a 1.3 million-square-mile region that encompasses 18 countries in the eastern Caribbean. Sector San Juan comprises six shore units and two of the busiest ports in the nation, with more than 3 million visitors per year. 

Here are some of the positions of 10 of... the committee of PDP... in the report of March 2011 - ENDia

10 voices of PPD

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Before the governor Alejandro García Padilla announced today how the People's Democratic Party (PDP) will route the status debate, should review the different views that exist in the community around the development of so-called Commonwealth (ELA).
The last time the PPD conducted a thorough analysis of the issue was through a committee of status that gave a report to the community on March 30, 2011 and never processed in the Governing Board of the PPD, which yesterday held its first meeting in a year.  
The sovereigntist claim that this report is the starting point of discussions, it incorporates many of the proposals of partnership pact Senator Antonio Fas Alzamora, claiming that Puerto Rico longer a U.S. territory and enter agreement sovereign partnership with the federal government.
A summary of the testimony presented at the public hearings of the committee is part of the report.
Decide the Legislature of Puerto Rico to call a plebiscite of four alternative status or Status Assembly in PPD first debate will be the most difficult to agree details of a new definition aimed at improving or developing the current ELA.
Here are some of the positions of 10 of the testimony before the committee of PDP and status reflected in the report of March 2011. Speak for themselves and reflect the task you need to do that game, facing a new process status: 
1. Luis Sánchez Betances, now former attorney but back then as a lawyer who has advised the PPD:
* You can not speak of the sovereignty of the ELA. The Covenant of the premise that the ELA has colonial deficiencies; by definition, does not have sovereignty. "
 * On the proposal for a partnership agreement with the U.S. can not be altered without mutual consent: It seems contradictory to the principle of sovereignty which is based on international law 'governing any agreement provided that it was adopted with the consent of two peoples'.
* I doubt if there is free movement of residents of Puerto Rico to the United States of America and its territories some kind of limitation to allow the U.S. border.
* The jurisdiction of the federal courts as interpreters of the maximum U.S. Constitution will not be abdicated under some formula. The proposed (in the Covenant Association Senator Fas Alzamora) principle appears to limit that authority so it is not viable.
2 Cesar Miranda, now Attorney General and former Secretary General of PPD.: 
* Favored fully the proposed partnership pact Senator Fas Alzamora.
* The PPD must continue to aspire to a development of 'non-colonial, non-territorial' ELA.
* Lessons and realities: Independence died as an alternative; Puerto Ricans want a permanent union with the United States; we want American citizenship; Puerto Ricans appreciate the sense of security, funds and benefits provided by U.S..
* Leave the territorial clause of the U.S. Constitution has practical value for people.
3 Eduardo Bhatia, current president of the Senate.:
* The Puerto Rico national identity is central to the discussion of status.
* The PPD is not an ideological party, left or right, is a pragmatic party, to achieve a middle class.
* To achieve the development of ALS, the estadolibrismo must have full-time presence in USA.
4 Cirilo Tirado Rivera, Senator PPD.: 
* Puerto Rico is a U.S. colony.
* Proposed partnership agreement of at least 15 years.
* There is no way of putting economic development in Puerto Rico under the current ELA.
5. José Alfredo Hernández Mayoral, federal affairs secretary PPD: 
* The presentation of 'pacts prefabricated' doomed to failure by management to develop estadolibrismo commonwealth. It requires parties sit down to negotiate first.
* Absent Luis Muñoz Marín and Rafael Hernández Colón, the PDP made the mistake in 1998, carried away by the opposition, to approve an attempted definition has brought severe consequences to attempts to develop ALS.
* Was a mistake PDP asserting its aspiration to a 'non-colonial, non-territorial' ELA. The 'non-territorial' is a trap we have fallen into the PPD.
* The U.S. Constitution does not allow, in the development of ALS, the power to enter into international agreements is recognized. But it is possible to reach an agreement with the United States to prepare a protocol to reach certain international agreements consistent with federal authority.
. 6 Charlie Hernandez, PPD spokesman in the House: 
* The rhetoric of 'permanent union' has forced many to aspire to statehood.
* Puerto Rico is not going to develop economically to the stability created by the current relationship as is.
* The development of ALS is a matter of dignity.
. 7 Miguel Hernandez Agosto, former Senate President and PDP: 
* The ELA has not grown at all since 1952
* The way we have historically raised the federal funds and U.S. citizenship are obstacles to our right to self determination.
* Federal law fall upon us as 'missiles', whether good or bad.
* There must be an effort of political education for the people to lose fear of gaining power in their relationship with the United States.
. 8 Manager Luis Vega Ramos: 
* The PPD should not repeal institutional positions but clarify.
* Sovereignty is key to the development of ALS.
* The non-territorial development ELA; specific delegation of powers and limiting the authority of the United States in Puerto Rico were not anti-American and separatist proposals: proposals are pro Puerto Rico.
* The PPD should insist on the Constitutional Assembly Status.
9 Roberto Prats, president of Democrats on the island and former senator.: 
* Fully licensed It signed the testimony of Hernandez Mayoral.
* The term 'treaty' then place us outside the supremacy clause of the federal Constitution, as with the agreements of free association.
* Supports for the ELA a 'new federal law relationships', where it is clear that it would replace the old organic laws whose provisions remain in force in existing federal law relationships.
10 Josean Santiago, Comerio mayor and president of the Association of Mayors of the PPD.;
* We must insist on the Constitutional Assembly Status as soon assume the PPD power in 2013.
* Seeks to Puerto Rico you gain powers gradually strengthen us economically, to reduce dependence on the United States.
* We delivered to the Commission a document signed by 11 mayors endorsing the PPD Association Pact proposed by Fas Alzamora is adopted by the PDP as party base document.

Agapito The Defender: "I represent the people and defend the people of this country against anyone," he said.

"I represent the people and defend the people of this country against anyone," he said. 
Mike Nova comments: 
God, save the people of Puerto Rico from the "defenders" like these: demagogues and cheap populists, who think that they can influence and buy the public opinion with their empty and meaningless slogans.  
The true enemies are not the credit agencies, who just honestly do their job, but the political immaturity, lack of education and lack of governing and management skills; nepotism and corruption, etc., etc., etc.. And this is what the people of Puerto Rico will eventually learn to defend themselves against. The people might not be the smooth talkers, but they always know the best.  


Riposta el gobernador | El Vocero de Puerto Rico

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ALEJANDRO_GARCIA_PADILLA_2_6
Por Yennifer Álvarez Jaimes, EL VOCERO – 4:08 am
El gobernador Alejandro García Padilla dijo que el comisionado residente, Pedro Pierluisi, “fue a hablar mal de Puerto Rico” ante las casas acreditadoras en Nueva York.
A juicio de García Padilla, el también presidente del Partido Nuevo Progresista (PNP), defiende a las casas acreditadoras por encima de los puertorriqueños.
García Padilla opinó que “no tiene nombre” que “un funcionario electo de Puerto Rico haya ido a hablar mal de Puerto Rico” ante las acreditadoras.
“Yo represento a la gente y defiendo la gente de este País contra cualquiera”, sentenció. El mandatario dijo que las casas acreditadoras seguirán evaluando el crédito del País y “nosotros vamos a tratar de que sean más justos en la evaluación, pero no es añangotándonos”.
“¿Tú sabes lo que le pasa al que se baja mucho, verdad?”, lanzó García Padilla en referencia a un refrán popular en rueda de prensa.
García Padilla hizo las expresiones ante preguntas de la Prensa luego que el comisionado residente informó el martes que visitó las casas acreditadoras para hablar sobre la situación fiscal de Puerto Rico.
Pierluisi aprovechó para asegurar ante las casas acreditadoras que un próximo gobierno del Partido Nuevo Progresista (PNP) “no va a gastar ni un peso más de lo que se genere”.
“Les hablé claro, pero sin amenazas, para que no pierdan la fe en nuestro potencial y nos ayuden a volver a crecer, ya que no hay manera en que Puerto Rico pueda progresar sin tener acceso adecuado a los mercados financieros. Hoy más que nunca debemos tener una comunicación efectiva con los que evalúan el crédito de nuestras entidades gubernamentales y los que están en posición de financiar sus operaciones, y yo voy a hacer todo lo que esté a mi alcance para que así sea”, aseguró Pierluisi el martes.

Yennifer Álvarez Jaimes, EL VOCERO

Graduada de la Escuela de Comunicación de la Universidad de Puerto Rico, Recinto de Río Piedras con ocho años de experiencia como periodista en prensa escrita, radio y televisión.

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Radicará proyecto para que PR se acoja a la quiebra

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Pierluisi
Por Stephanie Gómez Álvarez, EL VOCERO – 4:01 am
El comisionado residente en Washington, Pedro Pierluisi, se apresta a radicar legislación federal con el fin de que Puerto Rico tenga la posibilidad de acogerse al Capítulo 9 de la Ley de Quiebras este mes.
“Estaré presentando un proyecto de ley para que Puerto Rico tenga acceso al Capítulo 9 de la quiebra federal antes que comience receso el 1ro de agosto”, aseguró Pierluisi a EL VOCERO, al destacar que la misma será bipartita.
El Comisionado Residente destacó que esta disposición que provee para la reorganización y reestructuración de entes gubernamentales, está a disposición de todos los 50 estados bajo un un sistema organizado bajo la supervisión del Tribunal Federal.
“El liderato congresional está muy receptivo. También le mencioné a grandes fondos de inversión. Lo importante es que esté disponible para que la Asamblea Legislativa sea quien tome la decisión si acogerse al Capítulo 9 porque ahora mismo no está disponible”, mencionó Pierluisi. Dijo además que esta sería su contribución ante Ley para el Cumplimiento con las Deudas y para la Recuperación de las Corporaciones Públicas, que a su entender estuvo caracterizado por la prisa, falta de transparencia y falta de debate público.
Pierluisi dijo que promovería esta legislación debido a que “es una estructura conocida, razonable y probada que cumple con las Constitución de Estados Unidos”, contrario a la llamada ley de “quiebra criolla”.
En esa misma línea, abundó que una posible restructuración de deuda en las corporaciones públicas es un camino lleno de piedras, que tiene todo tipo de implicaciones y repercusiones . A su entender, es importante que se entable una “comunicación más efectiva con las partes”. Pierluisi desaprobó las acciones del gobernador Alejandro García Padilla hacia las casas acreditadoras. “La actitud no puede ser la del Gobernador de insultar a analistas financiaros en cartas. Eso no abona, no ayuda”, sentenció.
“(García Padilla) tiene que rehabilitarse . Está en estado crítico, pero pudiera salir estableciendo una mejor conversación con los mercados con los fondos de inversión y con los sistemas de pensión”, le aconsejó.
Dijo que además de la banca, que ya fue advertida sobre los efectos de una posible reestructuración de la Autoridad de Energía Eléctrica, se verían afectados miles de puertorriqueños que han invertido en bonos , los sistemas de pensión, de retiro, tanto público como privado, los suplidores, los empleados y los pensionados.

Stephanie Gómez Álvarez, EL VOCERO

Editora de la página web <a href="http://ElVocero.com" rel="nofollow">ElVocero.com</a> y profesora universitaria graduada del Departamento de Comunicación de la Universidad de Sagrado Corazón.