Madagascar Development

The executive director of a federal control board overseeing Puerto Rico's public finances said Wednesday there will be a smaller surplus available for creditors, while a bond insurance company filed a lawsuit seeking to nullify a fiscal plan that aims to pull the U.S. territory out of its economic crisis. Executive director Natalie Jaresko told reporters that Puerto Rico's government could see a $35 billion surplus in the next 30 years, $4 billion less than originally projected in the fiscal plan approved recently by the board. She noted not all the money would necessarily go to creditors seeking to recover part of their investment in Puerto Rico bonds as the government tries to restructure a portion of its more than $70 billion public debt load amid an 11-year recession. "It's a basis for what's available," she said. Assured Guaranty Corp., which insures $1.4 billion in Puerto Rico general obligation bonds, filed a lawsuit Wednesday asking a judge

U.S. lawmakers closed a long-standing legal loophole that helped spark a financial crisis in Puerto Rico that has decimated the savings of thousands of residents. Tucked inside legislation that passed the House of Representatives Tuesday night — a larger bill largely focused on rolling back Dodd-Frank banking regulation — is a provision that creates greater oversight of brokerage firms operating in U.S. territories. The provision ends a 78-year-old legislative loophole that allowed subsidiaries of global banking institutions that operated in U.S. territories, like Puerto Rico, to do certain types of financial transactions that are legally barred stateside. This exemption from the so-called Investment Company Act of 1940 also allowed funds in Puerto Rico to skirt leverage standards and certain affiliated party transactions that apply to funds operating in the U.S. The loophole allowed for Swiss banking giant UBS and other banks to underwrite specific Puerto Rico bonds and t

A U.S. government report Wednesday detailed how Puerto Rico accumulated some $70 billion in public debt and suggested ways federal officials could help avoid a repeat of the crisis, such as removing a triple-tax exemption on the island’s bonds and requiring local investment companies to disclose risks associated with those bonds. The report comes nearly two years after Congress enacted a law to help Puerto Rico restructure a portion of its debt and establish a federal control board to oversee the island’s finances amid what is now a more than decade-old recession. It also allowed the Government Accountability Office to examine what led to Puerto Rico’s crisis and actions the U.S. government could take. “From highlighting the stifling debt, to identifying the systemic financial malpractice of the Puerto Rico government over the past half century, the GAO report reiterates why Congress passed (the law) two years ago,” said U.S. Rep. Rob Bishop, chairman of a committee that has juris

Before Hurricane Maria hit last September, Puerto Rico was battered by the forces of another storm — a financial storm. The island's own government borrowed billions of dollars to pay its bills, a practice that Puerto Rico's current governor, Ricardo Rosselló, now calls "a big Ponzi scheme." But it didn't fall into financial ruin all on its own: Wall Street kept pushing the Puerto Rican government's loans even as the island teetered on default, with a zeal that bank insiders are now describing with words like "unethical" and "immoral." NPR and the PBS series  Frontline  spent seven months looking into Puerto Rico's difficult recovery from Hurricane Maria. And beneath the storm damage we found the damage from those economic forces, triggered by a government desperate for cash and banks and investment houses on Wall Street that made millions off that desperation. Some of those banks found ways to make even more money that risked th