As Puerto Rico prepares to sell $900 million in new bonds, Prof. Arturo Porzecanski focuses attention on the Government Development Bank’s key role in Puerto Rico’s financial crisis
New report documents systemic financial risks posed by the GDB
WASHINGTON, Sept. 22, 2014 /PRNewswire-HISPANIC PR WIRE/ — Just days after Puerto Rico announced plans to issue $900 million in additional revenue-backed debt, American University international economist Arturo Porzecanski will host a media teleconference, Wednesday, September 24, from 12 noon to 1 PM EDT, to discuss the upcoming bond offering and his new report on Puerto Rico’s Government Development Bank (GDB), which highlights its central role in the Commonwealth’s fiscal crisis.
Porzecanski’s report, The Government Development Bank: At The Heart of Puerto Rico’s Financial Crisis, offers the first critical look at the role played by the GDB, better known as the Commonwealth’s “piggy bank.” Despite being by far the largest banking institution in the United States which is overseen neither by the Federal Reserve nor the FDIC, the GDB has managed to escape scrutiny by credit-ratings agencies and Wall Street analysts alike. “Evidently, few are keen to take on the almighty GDB,” Porzecanski argues, “even though it is such a ‘black box’ and crucial arm of the government”
Dr. Porzecanski will discuss key findings, including: how the GDB facilitated the decade-long borrowing binge that led to the current crisis; how the bank itself is vulnerable because of all the loans it has granted to state entities at the edge of default; how legal changes are necessary to prevent public corporation defaults from having a spillover effect on general-obligation debts; and how the bank’s financial vulnerability, poor transparency, and lack of backing by a lender of last resort pose a systemic threat to Puerto Rico and to the mainland United States.
Date: Wednesday, September 24, 2014
Time: 12 noon EDT
Dial-In: Dial: 866-952-1906 Conference ID: Arturo
Dr. Arturo Porzecanski is a professor of international economics at American University in Washington DC and Director of its International Economic Relations Program. He previously worked for nearly three decades as a senior international economist on Wall Street. (http://www.american.edu/sis/faculty/aporzeca.cfm)
