New Study Examines the Costs to Puerto Rico of Nullifying the Government’s Agreement with Doral
Dr. Shapiro: Treasurer’s Actions Could Increase the Likelihood of Puerto Rico Defaulting on its Debts
August 26, 2014 WASHINGTON – Dr. Robert J. Shapiro, chairman of the advisory firm Sonecon and former U.S. Undersecretary of Commerce for Economic Affairs, held a media teleconference today with Doral Chief Legal Counsel and Gibson, Dunn and Crutcher Partner Matthew D. McGill to discuss the Government of Puerto Rico’s recent abandonment of negotiations with Doral Financial Corporation. On the call, Shapiro announced the release of his latest study– A “Penny-Wise and Pound-Foolish” Policy: The Costs to Puerto Rico of the Treasurer Nullifying its Agreements with Financial Institutions, Including the Possibility of a Sovereign Debt Default – which concludes that the Puerto Rican government’s failure to settle with Doral could lead to losses in investment, economic growth, and revenues that will far exceed the cost of simply paying Doral what the company is owed.
“It is an expensive proposition for Puerto Rico to renege on its agreements, and as a result, the Government is squandering what little credibility it has left with investors. It is the people of Puerto Rico that will bear the brunt of the costs. Governor Padilla can be a leader – he can resolve this, and I sincerely urge him to do so.”
Regarding the failed negotiations, McGill described the Doral legal team’s disappointment with Hacienda’s abandonment of negotiations, but noted its confidence in the subsequent trial.
“The government has walked away from an agreement and has sent us back to the course of litigation and a trial. It is a disturbing trend and an unfortunate result because there could have been an amicable resolution to this matter. The government owes Doral money and the government does not want to pay. We will go to court to make them pay.”
Dr. Shapiro’s paper, as well as a recording of the call, is available on the Doral Puerto Facts Website, www.doralpuertoricofacts.com , which is a resource for information regarding the Doral Financial Corporation, LLC legal case against the Puerto Rican government.
Doral Financial Corporation is a bank holding company engaged in banking, mortgage banking and insurance agency activities through its wholly-owned subsidiaries Doral Bank, with operations on the mainland U.S. (New York metropolitan area and northwest region of Florida) and Puerto Rico. Doral Financial Corporation’s common shares trade on the New York Stock Exchange under the symbol DRL. Additional information about the case of Doral Financial Corporation against the Government of Puerto Rico can be found at www.DoralPuertoRicoFacts.com.