Credit Rating Agencies Throw Our Senior Citizens Under the Bus And Congress Pulls Out All Stops to Protect Their Wall Street Friends!

Commentary

Richard Lawless










Once again we are faced with one inevitable truth.  Our legislators protect Wall
Street, not us.

The municipal bond market is approximately $4.2 trillion dollars. Municipal
bonds are a favorite of retired Americans and Senior Citizens for their double
tax free income.  80% of the bonds issued are either directly held by these folks
or held through a mutual fund.

Senior Citizens rely on this income to supplement their social security and pen-
sions.  The average bond holder has a household income of $30,000 or less.

There is clear and compelling evidence of massive municipal bond fraud on the
part of S&P, Moody’s and Fitch.  The Puerto Rico financial collapse spurred a
number of Senatorial Hearings in Puerto Rico.  In these hearings there was di-
rect sworn testimony from municipal agency executives that the rating agencies
knew they were bankrupt but for the right fee would issue a good credit rating
for their bonds.  Subsequent accounting audits of the bond issues verified that
the entities were technically bankrupt when S&P, Fitch and Moody’s issued good
credit ratings to them.  $56 billion of the $70 billion in bond debt issued, is held
by Americans in the fifty states.

In addition to first hand testimony and audits there is abundant evidence of coll-
usion between the rating agencies.  Much like the results of a DNA test; 10,000,
000 to 1 probabilities, the odds that the three rating agencies got the same things
wrong across so many bond issues, leaves no doubt, there was collusion. Make no
mistake, the evidence is overwhelming and this is a massive criminal enterprise in-
volving hundreds of billions of dollars.

All of our Congressman and Senators have been given the testimony and the audits.
The legislatures are aware of the SEC and FBI investigations and are doing every-
thing they can do to obstruct any progress on that front.  There are even CIA recor-
dings that implicate the Puerto Rico FBI and US Attorney offices in this criminal
enterprise.

While most of our Representatives do nothing, a small but powerful group of Con-
gressman and Senators are aggressively throwing us under the bus to protect their
contributors.

A complete and full report was also sent to the House and Senate Oversight Co-
mmittees. I recommend that all Americans call the numbers below and let them
know, “WE ARE MAD AS HELL AND WILL NOT TAKE IT ANY MORE”.


House Committee on Oversight                           Senate Committee on Oversight
2157 Rayburn House Office Building                   340 Dirksen Street (Senate Offices)
Washington, DC 20515                                        Washington, DC 20510

Phone: (202) 225-5074  Fax: (202) 225-3974        (202) 224-4751



Mr. Lawless has twenty-five years of experience in performing forensic accounting reviews.  Mr. 
Lawless received his Bachelor of Science Degree from Pepperdine University and a Master’s in 
Business Administration with a focus on finance from the University of San Diego.  Richard has
had a long banking career as a commercial lender and has served as a senior and executive ma-
nager for major banking institutions. In these roles Mr. Lawless was responsible for billions of 
dollars in assets.  Mr. Lawless has also served as Chairman and CEO for a number of non-ban-
king companies some of which have been in the energy sector. Mr. Lawless' opinions are exclu-
sively his own and do not necessarily represent those of Th Puerto Rico Monitor, its contributors 
or advertisers.

Puerto Rico News Digest For July 2, 2015

FINES FOR WATER MISUSE NOW IN EFFECT

Puerto Rico's water utility, AAA, began to issue fines yesterday to water
users who were in violation of rules approved on June 15 and which be-
came effective yesterday. The rules cover all 48 municipalities which are
suffering from drought, for as long as the crisis lasts. Fines range from $250
for residential users to $750 for commercial users. Among the actions that
can prompt a fine: hosing down driveways or other structures, filling water
fountains that don't reuse water, washing vehicles with water that is not being
reused, filling swimming pools, watering grass or plants from 8 AM to 6 PM,
knowing of broken water pipes or leaks on your property and not fixing them,
letting water run indiscriminately, using water for recreational purposes and
performing maintenance on water tanks if it means dumping more than 85%
of the water in it. You are allowed to wash a car with a bucket, wash laundry
and water plants at night.

NEW AREAS ADDED TO WATER RATIONING PLAN

AAA has announced that water rationing will be extended to new areas star-
ting this coming Monday, July 6. The areas to be affected are: Guaynabo,
Montehiedra, Caimito and La Morenita in Bayamón. Little to no rain is ex-
pected over the drought-stricken areas of the island in the coming days.

RATINGS AGENCIES DOWNGRADE PR DEBT

From The San Juan Daily Star:

Standard & Poor’s Ratings Services (S&P) and Fitch Ratings lowered their
credit ratings for Puerto Rico on Tuesday after Gov. Alejandro García Pa-
dilla said the commonwealth needed to restructure its debt. S&P said it
placed all of Puerto Rico’s debt at the same ‘CCC-minus’ level. Fitch Ra-
tings also downgraded Puerto Rico’s general obligation (GO) and related
debt ratings to ‘CC’ from ‘B’.

GOV'T AGENCIES TO UNDERGO MAJOR CHANGES

From Caribbean Business:

Agency consolidation, municipal office closures and providing more govern-
ment services online were some of the "profound changes" public agencies
could face to reduce costs, La Fortaleza Chief of Staff Víctor Suárez said
Wednesday. "There are agencies that will undergo profound changes in how
they provide services to the government and the way the government commu-
nicates with these agencies. That is a discussion that had already begun and
will be discussed more intensely in the coming days," Suárez said at a press
conference at La Fortaleza. The drastic transformations have been discussed
at meetings convened by Gov. Alejandro García Padilla to hear ideas and see
which mechanisms he will implement to restructure the island economically
following his announcement Monday that the island's debt is "unpayable."

PUBLIC WORKERS TO KEEP GETTING PAID

From Reuters:

Puerto Rico's public workers should not worry about getting their paychecks as
the government will keep paying them, at a cost of $250 million every 15 days,
the commonwealth's House Speaker Jaime Perello said Wednesday. A key bill
that has secured legislative passage and that is expected to be signed into law
this week will boost the island's cashflow for its operations by allowing it to ra-
ise $400 million in Tax & Revenue Anticipation Notes (TRANs). The govern-
ment will raise the cash for the notes from three public insurance corporations.

Puerto Rico News Digest For May 22, 2015

HIGLER'S FAMILY IN PR FOR HEARING

L: Laurens Higler. R: Gerardo de La Paz.

Relatives of Laurens Higler, the Dutch globetrotter and sailor who was
killed in a hit and run car accident in  March, are in Puerto Rico to attend
a court hearing for 49-year-old Gerardo De La Paz, the man accused of
hitting Higler with his car by the side of the road in Guayama and fleeing
the scene. Mother Rianne Higler stated "It is unforgivable that he didn't
stop the car, that he didn't call 911 and that he didn't help my son", in re-
gards to De La Paz, as reported yesterday by El Nuevo Dia. Laurens
Higler would have turned 27 years old on May 20.

At the hearing, De La Paz -- who is free but wearing an ankle monitor --
opted to go directly to trial for the charges of negligent homicide and vio-
lating the recently amended Article 5.07 of Transit Law 22. He was also
driving with an expired driver's license. The judge set the trial date for
June 26. De La Paz could face prison time, but there is  also the possibility
that he might only get a suspended sentence. After the hearing, De La Paz
agreed to meet the late Higler's family in private, but after the brief encoun-
ter, De La Paz hurried out of the building accompanied by his lawyers.

HOUSE APPROVES 11.5%  'IVU' TAX

From Caribbean Business:

After much debate and opposition, the House of Representatives app-
roved Thursday the tax bill that calls for the implementation of an
11.5% sales tax at cash registers, up from the current 7% paid under
the sales & use tax (IVU by its Spanish acronym), after introducing
several amendments on the floor. The final vote count was 26 in favor
and 24 against, including two Popular Democratic Party (PDP) legisla-
tors, Reps. Carlos Vargas and Angel Matos, and the New Progressive
Party minority delegation. It now moves to the Senate, where discussi-
on on the amended bill is expected to take place Friday, with the upper
chamber's session slated to begin at 10 a.m.

ACOSTA BLASTS MOODY'S GDB DOWNGRADE

From News Is My Business:

Government Development Bank President Melba Acosta came down
hard on Moody’s Investors Service’s decision to downgrade the Co-
mmonwealth’s credit rating deeper into junk status by saying the move
shows “ratings agencies are totally out of tune with what’s happening”
in Puerto Rico. Reading off an email she said she received earlier in the
day from a banker who expressed to her that markets were reacting fa-
vorably to the proposed increase in the sales and use tax — up to 11.5
percent from 7 percent approved Thursday by the House — and about
the budget, Acosta called Moody’s decision “a bit ironic.”

BUS OWNERS INDICTED FOR BID-RIGGING

From FBI:

A federal grand jury in San Juan, Puerto Rico, returned an indictment
against five individuals for participating in bid rigging and fraud cons-
piracies at an auction for public school bus transportation contracts in
Puerto Rico’s Caguas municipality, the Department of Justice announ-
ced today. A seven-count felony indictment was filed yesterday in U.S.
District Court of the District of Puerto Rico in San Juan against five bus
transportation company owners: Gavino Rivera-Herrera, Luciano Vega-
Martínez, Alfonso Gonzales-Nevarez, José L. Arroyo-Quiñones and
René Garay-Rodríguez.

Count one charges the bus owners with participating in a conspiracy
to rig bids and allocate the market for public school bus transportation
services in the Caguas municipality. The second count charges the bus
owners with conspiracy to commit mail fraud and counts three through
seven charge the bus owners with committing mail fraud. According to
the indictment, the defendants and others defrauded, and conspired to
defraud, the Puerto Rico Department of Education and the Caguas mu-
nicipality, among others, in order to fraudulently obtain contracts for
school bus transportation services.

Puerto Rico News Digest For March 13, 2015

CUBAN MIGRANTS RESCUED FROM MONITO

Photo: U.S. Coast Guard

From Local 10:

The U.S. Coast Guard rescued eight Cuban migrants from Monito Island,
Puerto Rico Wednesday afternoon, following a two-day rescue effort in the
Mona Passage. Authorities said the seven men and woman were spotted
Tuesday afternoon by a Coast Guard  pilot who was on a routine patrol
in the Mona Passage. Authorities said the group was stranded at the
bottom of a 150-foot  cliff of the uninhabited island, which is a natural
reserve and serves as a bird habitat.

DUTCH TRAVELER KILLED IN HIT AND RUN

Globetrotter and sailor Laurens Higler, age 26, was killed this
morning on Road 3 in Guayama after being struck by a car. The
driver fled the scene after the incident.  The deceased, who was
from Holland, was stopping off in Puerto Rico during his travels
around the globe.  Police have stated that they have recovered
physical evidence which could lead them to the driver who struck
Higler.

GOVERNOR DEFENDS IVA TV MESSAGE

From The San Juan Daily Star:

Gov. Alejandro García Padilla on Wednesday defended his most recent
pre-recorded televised message, in which he justified his proposed tax
reform and the 16 percent value added tax. “What this message was
about, at the end of the day, is to be  able to speak to people directly,
and there is a public purpose that is priceless,” García Padilla said in
TV interview. “We are talking about a profound transformation and
all transformations convey resistances.”

EIGHT MURDER VICTIMS IN LESS THAN A WEEK

As reported today by El Vocero, eight people were killed -- mostly in
shootings -- between Tuesday afternoon and early Friday morning.
The incidents were reported in Hato Rey, Santurce, Yabucoa, Bayamón
and San Lorenzo. This week's murders bring the total for the month to
20, five more than at this time last year. So far, 103 violent deaths have
been registered in Puerto Rico, 27 less than last year.

MOODY'S DOWNGRADES UPR BONDS

From Caribbean Business:

Moody's Investors Service said it downgraded $489 million of  University
of Puerto Rico University system revenue bonds to  Caa2 from Caa1 and
$73 million of educational facilities revenue bonds, 2000 Series A issued
through AFICA to Caa3 from Caa2. The outlook is negative.

The rating differential between the university system revenue bonds and
the educational facilities revenue bonds reflects the subordinate pledge
and lease structure of the educational facilities revenue bonds.

DORAL BANK GOES TO CHAPTER 11 BANKRUPTCY

From Reuters:

Doral Financial Corp filed for Chapter 11 bankruptcy protection  on
Wednesday to wind down its remaining operations two weeks after its
Puerto Rico-based bank subsidiary was seized by regulators. Doral
Financial's bankruptcy is the latest reminder of the financial crisis on
the island, a U.S. commonwealth, which has been mired for years in
an economic slump. The bank has also been dogged by accounting
problems and an employee was recently indicted for money laundering.



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