How Wall Street Bankers Committed Massive Fraud in Puerto Rico
From Mike Papantonio
<Mike Papantonio of RT exposes US Global Banks for defrauding investors in Puerto Rico through a massive municipal bond scheme and about how they were able to pull off this scam and why no one was sent to prison as a result.>
Puerto Rico not a state of the USA. It’s a Commonwealth that the US said ‘mine’ to in the late 1800s. Which means Puerto Rico is like a college kid — kinda independent, kinda not. Puerto Ricans don’t pay certain federal taxes, and they can’t vote in US presidential elections. But they are US citizens, they use the US dollar, and they can join the US army.
The US gov. used to give major tax breaks to corporations operating in Puerto Rico, which drove a LOT of business to the island. But in 2006, Congress let those tax breaks expire. Cue – businesses using the pullout method and sold off their junk bonds before leaving. And then Puerto Rico went into a recession from an already shrinking economy that was too dependent on the thin leverage from mutual funds.
People started leaving the island, which meant fewer people were paying taxes. Lower tax revenue meant Puerto Rico had to cut back on public services, and hike tax rates. Which caused even more people to leave the island. Nine years later, Puerto Rico is still in a recession.
Unfortunately for Puerto Rico, none of its cities or public companies have access to US bankruptcy protections. And Congress has the power to change that. As usual, there are opinions: Dems think Puerto Rico’s public companies should get the OK to declare bankruptcy. The GOP says that wouldn’t do enough to solve the island’s underlying spending issues.
Corporate media, such as NBC, CBS, and ABC is focused on the fact that Puerto Rico is now experiencing a 70 billion dollar debt crisis.
What they spend far less time talking about is that America’s Wall Street planned that 70 billion economic burn down and that US taxpayers are directly and indirectly responsible for having to pay for that cleanup.
It’s not complicated. Firms like CitiGroup, Goldman Sachs, Merrill Lynch and Santander joined with Wall Street to knowingly and intentionally pull off massive fraud by selling their worthless junk bond inventory on the open market to mom and pop investors all over the island.
These were used to pay back bank loans and retirement funding – which now put the local banks out of business.
Banks absolutely knew that they were holding high risk junk bonds that they needed to get rid of in order to maximize their personal profits and save the company from massive losses. That’s what it was about.
US investors backing all securities and bonds connected with Puerto Rico are going to be affected by the island’s defaults. The island’s credit rating has been reduced to what they call ‘junk’ on the open market.
As of today the poverty rate as a result of unemployment, rising debt has created a failed economy that’s actually double that of Mississippi.
Global banks have made enormous profits from the bank driven economic disaster. They ordered their people to sell the worthless bonds anyway or “go look for another job,” that’s what they told their employees – they knew they were worthless.
Santander – as an example – had a plan internally to take their own exposure to zero on junk bonds without telling their own clients about the problems that were inevitable and told them bonds were safe. That’s problem number one.
Problem number two, it’s called front-running. None of these bonds or funds are traded on an exchange. Santander (like all the other banks) knew that if they dumped their inventory before their clients, the price pressure caused by the sales wouldn’t be borne by them – it would be borne by the clients. They front-ran, meaning they sold their bonds ahead of the client because they knew the prices would get driven down.
They commit the fraud, make several billion dollars, and then pay some ridiculously small fine that, by the way, taxpayers end up paying – because they pass that fine onto the taxpayer.
Puerto Rico can’t pay for garbage, they can’t pay for police, they can’t pay their teachers, they can’t pay essential services, and they can’t pay the bonds. They’re starting to default. This is ultimately going to get placed on the shoulders of mainland taxpayers, no doubt about it.
What happened in 2008 and is happening now in Puerto Rico is the exact same story. The firms know that they can take the risk all their books, shove it onto their investors. And get bailed out.
None of the perpetrators will be persecuted as the small island cannot cope with the trash – let alone have money to try banksters.
https://goldsilver.com/blog/how-wall-street-bankers-committed-massive-fraud-in-puerto-rico-and-stayed-out-of-jail/
http://www.thefiscaltimes.com/2016/11/20/Why-Puerto-Rico-s-Debt-Crisis-Could-Get-Even-Worse
http://www.theskimm.com/skimm-guides/puerto-rico-debt-crisis
Y_ 3 years ago.
