{"id":23539,"date":"2016-02-08T14:53:17","date_gmt":"2016-02-08T19:53:17","guid":{"rendered":"http:\/\/cfif.org\/v\/freedom_line_blog\/?p=23539"},"modified":"2016-02-09T21:53:06","modified_gmt":"2016-02-10T02:53:06","slug":"puerto-rico-lingering-questions-for-banco-popular%e2%80%99s-richard-carrion","status":"publish","type":"post","link":"https:\/\/cfif.org\/v\/freedom_line_blog\/23539\/puerto-rico-lingering-questions-for-banco-popular%e2%80%99s-richard-carrion\/","title":{"rendered":"Puerto Rico: Lingering Questions for Banco Popular\u2019s Richard Carrion"},"content":{"rendered":"

Late last year, we posed several questions<\/a> to Banco Popular President and CEO Richard Carrion, in conjunction with his appearance as a witness during a Congressional hearing on Puerto Rico\u2019s public debt.<\/p>\n

Our questions centered mainly upon his recent emergence as a staunch advocate of a unilateral restructuring of Puerto Rico\u2019s debt, a bizarrely anti-lender stance for the head of the\u00a0 Island\u2019s largest bank. \u00a0Among our questions, we asked how Carrion\u2019s bank had avoided the severe exposure to Puerto Rican debt experienced by the Island\u2019s other lenders and citizens, and why Popular \u2013 a private sector leader by any definition \u2013 has been so reluctant to align with other private sector actors in negotiating a consensual debt solution between Puerto Rico and its lenders.<\/p>\n

Needless to say, we found Carrion\u2019s newfound fondness for complete restructuring puzzling.<\/p>\n

A closer look at Popular\u2019s financial disclosures, however, reveals the real reason the bank so proudly advocates in support of a super restructuring: \u00a0In 2014 and 2015, Popular shed massive amounts of government and public corporation debt that would be subject to a restructuring, enabling it to emerge as an ally for the Garcia Padilla Administration.<\/p>\n

In December 2014<\/a>, Popular was itself a large bondholder, with approximately $337 million of their $811 million (42%) exposure to Puerto Rican debt in public corporations PRASA and PREPA. \u00a0Its exposure to General Obligation debt was roughly $82 million, or 14% of its holdings.<\/p>\n

Fast forward one year<\/a>.\u00a0 Banco has reduced its exposure to debt that would be subject to a restructuring drastically, now holding only $59 million of public corporation debt (10%) and $23 million (4%) of general obligation debt. \u00a0The remaining 86% of its exposure is to debt is in the form of loans to municipalities, which are not and never have been part of the restructuring discussion. \u00a0It has actually increased its exposure to this \u201csafe\u201d municipality debt by about $20 million over the same time span.<\/p>\n

In other words, over the last year, Banco Popular has shed exposure to hundreds of millions in debt that would be subject to La Fortaleza\u2019s scheme, while unsuspecting Puerto Ricans held various debts (PFCs, GOs, PREPA) and lost their hard-earned money.<\/p>\n

Herein lies the twist: \u00a0Carrion\u2019s timing was impeccable, but it also raises red flags.<\/p>\n

In a recent news report, the Washington Free Beacon<\/em><\/a> notes Carrion\u2019s relationship with Antonio Garcia Padilla, the scandal-plagued brother of the governor who is the lone employee of a suspicious island-based non-profit. \u00a0That non-profit, of which Carrion is a board member, has received large contributions<\/a> from Banco Popular and is housed in the bank\u2019s San Juan headquarters. \u00a0Was Popular given advanced warning of this plan in exchange for that money?<\/p>\n

As if that\u2019s not already bad enough, there\u2019s more.\u00a0 Popular\u2019s close relationship with the Garcia Padilla administration continues to pay dividends. \u00a0Banco stands to generate another $9 million in profit<\/a> from the government\u2019s recently proposed liquidation of Housing Finance Authority Assets, another windfall for what has already been a profitable<\/a> financial crisis for the bank.<\/p>\n

And what about the rest of the bondholders \u2013 those who will be wiped out by an unconstitutional restructuring, and don\u2019t have the luxury of dumping their life savings in exchange for sweetheart deals from the Garcia Padilla administration?<\/p>\n

If Popular truly seeks to restructure these debts for the good of Puerto Rico, will it support the same type of unilateral restructuring for other types of loans taken out by regular Puerto Ricans who are Popular customers? \u00a0Will Popular allow its own clients to restructure their mortgages and car loans and cease and desist from any and all foreclosure processes against these borrowers?<\/p>\n

Call us skeptical.<\/p>\n","protected":false},"excerpt":{"rendered":"

Late last year, we posed several questions to Banco Popular President and CEO Richard Carrion, in conjunction with his appearance as a witness during a Congressional hearing on Puerto Rico\u2019s public debt. Our questions centered mainly upon his recent emergence as a staunch advocate of a unilateral restructuring of Puerto Rico\u2019s debt, a bizarrely anti-lender […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[932,4687],"class_list":["post-23539","post","type-post","status-publish","format-standard","hentry","category-posts","tag-bankruptcy","tag-puerto-rico"],"_links":{"self":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/23539","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/comments?post=23539"}],"version-history":[{"count":3,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/23539\/revisions"}],"predecessor-version":[{"id":23544,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/23539\/revisions\/23544"}],"wp:attachment":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/media?parent=23539"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/categories?post=23539"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/tags?post=23539"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}