Deja Vu: US House Republicans screw over bondholders like Obama did with the auto industry. - Granite Grok

Deja Vu: US House Republicans screw over bondholders like Obama did with the auto industry.

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Remember how the Republicans howled (and gave more credence to the nascent TEA Party) when the Obama Administration bailed out the auto industry?  That it thumbed its nose at the Rule of Law?  Secured bondholders, by law, had first dibs in any bankruptcy actions – and the Obama Administration cut them off at the knees and emasculated them for 29 cents on the dollar.  Meanwhile, crony unions and the well connected made out quite well (40 cents on the dollar even as they should have gotten nil). Then, Obama smeared them as profiteers (much like Hillary and Elizabeth Warren (plus her other surrogates) are now doing to Donald Trump).  We all called them “Government Motors” as this was a perfect example of “State Capitalism / Corporatism” – government running the economy by controlling large corporations.

Did the DC Republicans remember that as being so bad?  Apparently not, as Republican Speaker of the US House Paul Ryan has just done the same thing to Puerto Rico bondholders – PROMESA (Puerto Rico Bailout) bill (reformatted, emphasis mine – go read the whole thing):

President Obama Signs Paul Ryan Bill and Immediately Suspends 5th Amendment…

Today President Obama signed the PROMESA (Puerto Rico Bailout) bill created by representative Paul Ryan, and with it the immediate suspension of the Fifth Amendment which was supported by a Senate vote yesterday.  The Fifth Amendment protects U.S. Citizens from federal seizure of property without compensation. It applies in this instance to Puerto Rico via the general obligation bonds (property) purchased by municipal bond holders (investing citizens), which were supposed to be repaid, and which Congress has now determined can be frozen.

And I would say the First Amendment’s most obscure clause as well:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.

Ayup.

In addition, PROMESA suspends legal redress, by blocking bond holders (property owners) from suing the debtor (PR) to recover their property.   In essence the Fifth Amendment is suspended, and the rights of those whose property has been confiscated to use the courts has been preemptively denied.

An unelected, entirely appointed, bureaucratic panel of DC political agents/appointees is now in control of the entire process. Say hello to the Paul Ryan version of constitutional republic, where the constitution is arbitrarily suspended entirely at the behest of Washington DC’s needs.

Yes America, this is how speaker Paul Ryan defines “conservative”.

And what happened to the bondholders, many of which invested in Puerto Rico bonds either directly or indirectly as part of their retirement plans?

SAN JUAN (Reuters) – Puerto Rico authorized suspension of payments on its general obligation debt on Thursday just minutes after U.S. President Barack Obama signed a law creating a federal oversight board with authority to negotiate the restructuring of the island’s $70 billion in debt.

The executive order issued by Puerto Rico’s governor, Alejandro Garcia Padilla, comes just one day before the U.S. territory was due to make $1.9 billion worth of debt payments on July 1, including some $780 million in constitutionally-backed, general obligation bonds. It remains to be seen whether Puerto Rico will pay part of the GO debt or any of the non-GO debt.

So the consequences of decades upon decades of profligate spending by duly elected officials  are not to be borne by those same officials.  And I just posted this as who is to suffer the bad consequences of stupid decisions?

I can still hear the shrill screams of Michael Kitch in my ears: “but people are HURTING! How dare you not send them your money!” Same answer then as now – these same voters kept electing stupid (at best) thieving (probably true) politicians that kept making law that spent way beyond what they had – an American Greece (like Illinois!). So I have no, once again, empathy for the people of PR as they created this financial dufusity to themselves via their elected officials.

And there was no law that allowed PR the equivalent of Chapter 11 or 7.  So, they made it up out of whole cloth – just like the auto bailout, it puts aside our normal judicial process.  In other words, the Republicans put the end result ahead Due Process.  So, all that hot air from Ryan is filled with lots of smoke…

 

PROMESA, which passed the U.S. Senate on Wednesday, puts a stay, or halt, on litigation in the event of a default. Puerto Rico has already defaulted three times on portions of its debt in the last year.

…The oversight board will have the authority to facilitate consensual restructuring talks, or push Puerto Rico into a court-supervised process akin to U.S. bankruptcy. It will also oversee and monitor the implementation of sustainable budgets.

Still, missed payments matter for the insurers who have to pay out on claims should Puerto Rico not deliver the cash to its investors.

Once again, we see the brunt of the fail not falling on those actually responsible.  That is fundamental transformation.So, when the Republicans start ACTING according to their Principles and really upholding up the Rule of Law, perhaps I might become one again.  But I’m not holding my breath…

(H/T: Conservative Treehouse)

 

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