STUMP » Articles » Puerto Rico Round-Up: Still Waiting on Congress » 20 June 2016, 17:53

Over a week ago, I mentioned we were waiting on a couple things re: Puerto Rico, namely Congress to pass PROMESA and the Supreme Court to rule on Puerto Rico v. Franklin, 15-233.

SUPREME COURT DOES ITS JOB….

A ruling was handed down a week ago.

Let’s check out the commentary:

Opinion analysis: Puerto Rico’s debt woes left to Congress
Analysis

For the second time in a week, the Supreme Court has rejected the government of Puerto Rico’s efforts to use its self-governing powers — this time, nullifying the commonwealth’s attempt to devise a mechanism to work its own way out of more than $20 billion in public debt. The five-to-two ruling on Tuesday in Puerto Rico v. Franklin California Tax-Free Trust left the financial fate of the island entirely in Congress’s hands. A compromise debt-revision solution passed the House last week and now awaits Senate action.

….
The Court’s ruling in the debt case involved a highly complex effort to unravel actions by Congress in dealing with Puerto Rico under federal bankruptcy law. While the U.S. states are free to allow their local governments to file for bankruptcy if they become financially insolvent, Congress has denied that right to Puerto Rico.

Because that route was not open to the commonwealth, its legislature passed its own financial Recovery Act two years ago. The law would have restructured the public utilities’ debts, but without gaining consent of all of the investors who hold those debts. The Recovery Act was challenged by investment organizations such as hedge funds.

But that Puerto Rico-devised alternative was struck down by the Court on Monday in a finding that federal bankruptcy law preempts any local law enacted by the commonwealth on debt restructuring.

Puerto Rico had complained that being shut out of bankruptcy law while also being denied a right to self-help in this field left the commonwealth with no way to remedy its debt crisis. That argument did not persuade a Court majority, so the commonwealth was left with one option: get help from Congress.

As mentioned before, the House passed the bill named PROMESA.

AND CONGRESS?

Well, I have been looking around, and I don’t see anything on PROMESA moving forward in the Senate.

Instead, I see this.

A look at the 4 gun bills up for vote in Senate

Over just the past five years, lawmakers have introduced more than 100 gun control proposals in Congress. None of them has been passed. Now, after the biggest mass shooting in U.S. history a week ago, Democrats are hoping for a breakthrough. USA TODAY

Guys, after Newtown, you got essentially nothing. That involved some asshole killing a bunch of kids, some teachers, and his mother. Some state laws changed. And had no effect. The legislative spate from that ended 3 years ago.

You got nothing after San Bernardino. And you’re going to get nothing this time, too. You can talk compromise, but you’re still getting nothing.

I’m sure it’s really important to do the political grandstanding right now to DO SOMETHING, but there’s no real urgency to the gun control aspect. Maybe there’s urgency to the fundraising aspect.

I don’t know.

But I do know that there is a real deadline coming up soon: July 1.

See that big blue bar on July? That’s a bond payment “expected” on July 1.

A bond payment that’s not going to happen.

COLLATERAL DAMAGE: PENSIONS AND ZIKA

So it would be nice if the politicians quit their yammering and moved forward with doing something about Puerto Rico.

SCOTUS kicked the ball to Congress, where it’s let that ball go past and roll into a ditch. The House passed PROMESA. If the Senate is not going to pass it in a timely manner, it would be good to know.

Here’s one pension that’s being adversely affected:

Lawsuit Slams Puerto Rico Catholic Schools’Pension Plan

June 14 — A new lawsuit accuses those running the pension plan for Catholic school teachers in Puerto Rico’s capital city of mismanaging the plan to the point of insolvency and then retroactively claiming an exemption from federal worker protections ( Martinez-Gonzalez v. Catholic Schools of the Archdioceses of San Juan Pension Plan , D.P.R., No. 3:16-cv-02077, complaint filed 6/13/16 ).

According to the lawsuit, the plan’s administrators told participants for years that the plan was funded and federally insured in compliance with the Employee Retirement Income Security Act. The participants allege that they were informed earlier this year that the insolvent plan was an ERISA-exempt “church plan” and that it would be terminating, with the plan’s remaining assets largely reserved for those participants who were already receiving pensions.

More than 250 school employees have joined the lawsuit against the Catholic Schools of the Archdioceses of San Juan Pension Plan. They “conservatively” estimate that their vested pension benefits total more than $50 million.

The Catholic schools of San Juan aren’t the only entities in Puerto Rico experiencing pension woes. A recent audit of the commonwealth’s Employees’ Retirement System revealed that this plan for municipal employees had less than 1 percent of the assets needed to cover the $30.2 billion in benefits it had promised current and future retirees.

……
The teachers attribute this insolvency to the inappropriate investment strategy employed by the plan’s fiduciaries. According to the teachers, more than 80 percent of the plan’s assets were invested in Puerto Rican government bonds, which lost about three-fourths of their value over the past decade.

Man, that’s an ugly 80%.

Of course, PROMESA won’t help that pension. As this piece notes, PROMESA basically recognizes Puerto Rico’s bankruptcy and says “Yeah, you’re defaulting on your debt. We’re going to help you do that in an orderly way.” That’s not shoveling them any money. It’s just saying “yeah, you’re busted.” It’s not a bailout.

I have some sympathy for these bondholders, but they lent money to a deadbeat.

Deadbeats default. That’s reality.

Even when said deadbeats are governmental entities (I might say especially when they are).

Now that piece bitches the public employee pensions will get paid and bondholders won’t… I laugh. The pensions will also get cut. They really don’t have enough money to pay the pensions, either.

So yes, the pension may get less of a cut than the bondholders, but don’t make out like the pensioners will be made whole, either.

COMING ATTRACTIONS: ZIKA

And then there’s Zika:

Puerto Rico Struggles to Deliver Contraceptives as Zika Spreads

Only a small fraction of contraceptives donated in Puerto Rico to prevent Zika-related birth defects are expected to get to the women who need them this month, public health officials told Reuters.

The donations – tens of thousands of intrauterine devices and birth control pill packs – came from major healthcare companies as the virus spreads rapidly through the island.

The delivery delays illustrate the struggles of Puerto Rico’s healthcare system, which is faltering amid the commonwealth’s financial crisis.

Would you like to get on that, Congress?

And more in the way of Zika stories:

The number of people infected with Zika in Puerto Rico is rising at an alarming rate, putting pregnant women at even greater risk of their babies suffering severe birth defects, a top U.S. public health official said Friday.

The latest data show that the most accurate, real-time indicator of Zika infection suggests that thousands of pregnant women there could contract the virus in the coming months. That, in turn, could lead to “dozens to hundreds of infants born with microcephaly in the coming year,” Tom Frieden, director of the Centers for Disease Control and Prevention, said during a media briefing.

…..
About 1 percent of the island’s blood donors tested postive for Zika in the week ending June 11, the highest level since testing began in April, according to the agency’s report. The test measures whether someone is infected at that moment. A 1 percent positive rate translates to roughly a 2 percent infection rate each month, Frieden said — which in turn would mean an annual infection rate of about 25 percent for the commonwealth’s 3.5 million residents.

…..
Puerto Rico has 1,726 confirmed Zika cases, which include 191 pregnant women, according to its health department. Only one case of microcephaly has been reported there to date. (In the continental United States, which has far fewer Zika cases, at least six pregnancies involving infected women have been affected by microcephaly or other serious birth defects.)

Any time now, Senate. Before July 1 would be good.

The gun control yammering can start up at any time again, I promise.

Compilation of Puerto Rico posts

The State of the States: a Compilation