To say that the world has gone completely batty is putting it mildly, since whoever could imagine that the island’s mayors as well as cabinet department heads would—presumably tipped of by the governor—run out and establish bank accounts at Banco Popular, among others?
I bring you this news only after checking twice, and verifying twice, that the article Gobierno mueve su dinero del BGF, was published on the second day of April, not the first. Oh, and also reading an article saying that a group of bondholders are suing the government, saying that the move represents an attempt to shield funds.
The BGF is the government development bank—and is the bank which, generally speaking, receives and disburses funds. But now, according to El Nuevo Día, dozens of government agencies have established private bank accounts for their agencies.
It’s a little hard to see—no wait, it’s completely impossible to see how this could happen. Did the department heads simply go to a branch, ask to speak to a personal banker, and then announce they were the head of an agency, and had a check for umpteen millions to deposit?
Obviously not. But wait—under what authority can a department head even do such a thing? Aren’t there clearly established rules about how funds can be disbursed or transferred? Clearly, the order came from above, and the department heads were told what to do. But wait—did they all, like sheep, just follow orders? Didn't someone question the propriety—or legality—of such a move?
OK—so Banco Popular now has a big chunk of the government’s money. Nice, right? But wait, the government is broke, and may be / will be / is being sued by the people it owes money to. And now Banco Popular has become in a sense the government bank. So will Banco Popular get dragged into litigation, too? Oh, and what about the conflict of interest between a private bank being regulated by the banking commission? Right—there was no conflict there, but isn't there one now?
And suppose the government goes broke—which is sort of like imagining dinner—what happens to Banco Popular? And what happens to my money—that’s $37.63, the last I checked. OK—not much to you, but very important to me, since money is strange: the less you have of it, the more you care about it.
Well, then there’s the other question—we currently have only three or four banks on the island, and Banco Popular is the biggest. So now, we have a really HUGE bank, and remember that little trouble we got into 8 years ago about “too big to fail?” And if Banco Popular is in trouble, and the government is broke, well, then what happens?
No problem for me, of course, since I check religiously every time I go to the bank, and breathe a sigh of relief onto the sign telling me that the FDIC has me covered for up to a million bucks per account. But that’s for a regular bank, and is Banco Popular still a regular bank? Or is it now a hybrid, or even the government bank?
So I was scratching my head over this, and then wondering—am I the only one who thinks this is just the slightest bit bizarre? Because nobody except those pesky and avaricious bondholders is uttering a peep. Oh, except for the students at the University of Puerto Rico, who are so totally OK with the idea that they are urging the university to move funds too….
We are at the point where the ideology is wagging the tongues and actions. Consider those awful bondholders—are they all avaricious not to say rapacious raptors? No, since I am probably one of them, since I invested in mutual funds when I worked in the corporate world. So how much would I lose, if Puerto Rico chose not to pay my mutual fund what it owes it, whenever whatever bond comes due?
Full disclosure—I haven’t the vaguest idea, because like most people, I chose the fund by:
1. reading the full PDF file, writing notes on important topics, and approving of the sage investing strategy
2. consulting with a financial advisor, peppering him with pertinent questions, and then choosing the most advantageous but yet conservative investment strategy
3. looking at the logos, and deciding which made me feel better
Must I tell you?
So according to the Money section of CNN, 30% of the total Puerto Rico debt is held by regular Puerto Ricans, who were told that the investment was a sure thing, and didn’t they want to help their country? And another 15% percent is held by regular guys like me who invested in mutual funds. The rest is held by investment firms, of which some, yes, are vultures.
Well, now Banco Popular has somehow been chosen to receive the government money…but wait? Transparency? How did that deal go down? Because though I’ve never breathed a word of discontent to Richard Carrión on the two times I’ve met him, I am, well, just a little peeved with the bank. They charged me 25 bucks because I didn’t pay my Visa bill when I was lying in bed with a broken back! What bastards! So what are the fees going to be that Banco Popular is going to charge…. Oh, and why do I feel that I pay more quickly than the government?
So now I have a bald spot on the right side of my head, so hard have I been scratching it, and then in a race to outdo the absurdity, the legislature has just signed a bill allowing the governor to declare a moratorium on payment of debt, if he deems it necessary. But is that it? Doesn't it make more sense to require the head of the government bank and the head of the treasury to submit reports testifying that the payment of debt will lead to a specified depletion of funds, and that they (the department heads) sign off on the moratorium? And as if that’s not bad enough, the law gives the governor…wait, let me quote directly from El Nuevo Día:
El proyecto de “Ley de Moratoria de Emergencia y Rehabilitación Financiera de Puerto Rico” le otorgaría múltiples poderes al gobernador Alejandro García Padilla, absolutos y unilaterales, entre ellos la opción de expropiar propiedades a empresas privadas que se nieguen a continuar prestándole servicios al Gobierno durante una declaración de emergencia.
OK—this gives the governor the power to expropriate properties from businesses that decline to continue to give services to the government during an emergency.
Which sounds all well and good, but I might suggest to my doctor to think twice before she tells the government that she won’t keep seeing the government’s patients (since 45% of the population is at poverty level or below, can you guess how many people are enrolled in La Salud)? But if the government isn’t paying her, why should she keep seeing those patients? And will my copay go up three or four times to cover her losses?
So now she has to keep seeing the patients, or have her office expropriated…and I am definitely NOT going to want to be in the waiting room when that happens. Oh, and by the way, I have in the past been charmed at the idea of offering my blogging services to the government, but now? I ask you not for myself or Mr. Fernández, but what about the cats? Are they too to be thrown into the street?
Well, the senate passed the law at just before 3 in the morning, and that’s strange because I have a policy: whatever I’m thinking in the middle of the night will not seem so horrible or necessary in the warm light of morning. Three in the morning, in short, is a lousy time to think about anything. But now the house of represntatives has gone along, and the bill has been signed by the governor—no surprise there!—so a word to any suppliers out there? Tiptoe away from any business with the government, before it declares an emergency!
So now I have two bald spots, but at least it’s symmetrical, since I decided due to the sinister nature of the second affair to switch over to my left side. But why is it that no one seems to be worrying about all this? Or are the social media erupting in roars? Well, I ran over to Facebook and there was nothing but the picture of a wild turkey walking the streets of Madison, WI. Oh, and then the startling this:
Mr. Fernández, who got bumped from Facebook after posting a festive picture of the three Magi with magnificent erections and has had to hide behind the skirts of a dead (though beloved) cat…Mr. Fernández is cheerful? Look, I love him enough to have married him, and I’d do it again, but…
I can only think that he had a three-martini lunch before he took the test, but at least it provided me with the first merriment of the day. Oh, but wait!