Wednesday, August 31, 2016
History Is Repeating Itself and America May Not Survive
In 2006 a financial crisis of unprecedented magnitude hit America.
Wall Street, with at least complicit support from our legislators, the DOJ and re-
gulatory agencies began to create new financial instruments to sell to the Ameri-
can people. Unfortunately, these new investments consisted of pools of troubled
What made this all possible was that the three big credit rating agencies handed
out high investment grade credit ratings that allowed the complicit banks to sell
these investments to the general public. It really was that simple. Today there is
universal agreement that Moody’s, S&P and Fitch provided fraudulent credit ra-
Could you image what would happen to a real estate appraiser that knowingly
issued home values that were hundreds of thousand higher than the value of the
property and a dishonest borrower that borrowed millions based on these phony
valuations. The Banks would incur millions in losses and the borrower and app-
raiser would go to jail.
As of 2016, not one employee or executive at the rating agencies were ever
Our legislature is the recipient of tens of millions per year in political contribu-
tions and paid speeches. None of that money comes without strings. Our Cong-
ressmen and Senators did what they were paid to do and protected their Wall St-
reet friends. The DOJ and regulatory agencies are run by these very same legis-
lators and were prevented from prosecuting anyone.
Six trillion dollars in lost wealth, six million homes lost to foreclosure and mill-
ions of jobs lost.
Well, the Credit Rating Agencies are at it again and this time our country does
not have the resources to withstand another major crisis.
It has been a few years now since the start of the wholesale financial collapse of
Puerto Rico. Sufficient time has passed allowing Individuals, companies, regul-
atory agencies and our legislators the time to understand the root causes of his
That’s right, you guessed it! All of the credit ratings issued on Puerto Rico debt
were either misleading or outright fraudulent. But it does not end there, a quick
review of bond ratings from Chicago, Connecticut, California and New York re-
flect similar concerns.
The municipal bond market is $4,2 trillion dollars. Preliminary indications sugg-
est that as much as 60% of these bonds were sold to investors with an inappropri-
ate or misleading credit rating.
Once again our regulatory agencies, the DOJ and our legislators have circled th-
eir wagons around Wall Street. No matter how many American’s need to be thro-
wn under the bus, our government will not move against their friends.
So far tens of billions have been lost by our senior citizens who purchase these bo-
nds to supplement their modest retirement incomes. It will not end with Puerto Ri-
co; Puerto Rico is only the beginning.
Mr. Lawless is a career Banker and CEO of Commercial Solar Power, Inc. Mr. Lawless has been
working with the SEC, the FBI, The U.S. Attorney’s Office and the Treasury Department to un-
cover the reasons for Puerto Rico’s $70-billion-dollar bond default. Mr. Lawless has held Senior
and Executive positions with Wells Fargo Bank, Home Savings and Washington Mutual Bank
specializing in the issuance of debt instruments. Mr. Lawless holds a BA from Pepperdine Uni-
versity and a Master’s Degree from the University of San Diego.
The opinions expressed in the preceding commentary are exclusively those of the author and
do not necessarily reflect those of The Puerto Rico Monitor, its contributors or advertisers.