Argentina warns Citibank it could lose banking license

[Zorro]

Source: AP

Argentina threatened Friday to revoke Citibank's operation license if it refuses to process payments to bondholders, a move ordered by a New York judge presiding over a long fight between the country and a U.S. investment group.

In a statement, the Ministry of Economy said failure to process the payments could lead to criminal charges against Citibank's employees in Argentina. The warning came a day after U.S. District Judge Thomas Griesa told Citibank that it cannot let its Argentine branch process payments to bondholders unless U.S. investors are paid as well.

In a statement sent to The Associated Press late Friday, Citibank said it planned to appeal the decision and would "pursue all legal measures available to comply both with this decision and Argentine legislation."

The dispute stems from Argentina's default in 2001 on $100 billion of debt. Most bondholders agreed to debt-swap deals in 2005 and 2010 that lowered Argentina's payments. A group of U.S. hedge funds, however, demanded full payment on Argentina's debt and Griesa ruled they must be paid roughly $1.5 billion if Argentina pays interest to other bondholders.

Read more: http://news.yahoo.com/argentina-warns-citibank-could-lose-banking-license-204341077--finance.html

[Arcadiasix]

1. Argentina should pay it's debt in full

When some one owes me money I want to get it paid in full.

[forest444]

3. Actually, Argentina has since 2005.

This Wall Street judge, Thomas Griesa, has been impeding some bondholders (those with dollar-denominated bonds issued in New York) from collecting, which is different. Citibank, for its part, is appealing - and with good reason:

Say you owned a large tranche of bonds that had defaulted. You'd still be collecting because the bonds were successfully restructured in courts; everybody gave up something, so that all bondholders could still collect and be made whole. You'd collect at a discount, yes; but at higher interest than before, such that over time you'd actually make more money.

But say a small minority of bondholders went to another judge, which -despite laws forbidding the purchase of bonds for the purpose of suing for more later- reinterpreted the law entirely, and - after purchasing a large ranch Montana - gave these few holdouts the right to hold everyone's payments hostage until they were paid well above market value (and certainly much more than all other bondholders).

And say these were not legitimate bondholders at all; but Caribbean hedge funds that pay no taxes in the U.S., have full access to U.S. courts despite being domiciled offshore, have received billions in TARP monies despite taking part in billions more in tax evasion and other financial wrongdoing, and which purchased the bonds during a panic sale in 2008 for 20 cents on the dollar.

They're not suing for 100 cents on the dollar mind you, but for 320 - for a 1,600% return.

In the meantime, your payments sit in escrow; they were made, and continue to be made, but remain in limbo. While you fret and frown, bondholders who chose restructured bonds under London or Buenos Aires law instead, are still collecting on time and in full.

[Judi Lynn]

7. Insane. Something has really gone desperately wrong. Thanks. n/t

[salin]

9. Thank you for this additional information and perspective.

[forest444]

10. Certainly.

Here's how Foreign Affairs writer Mark Weisbrot described the situation:

http://www.cepr.net/index.php/blogs/beat-the-press/nyt-gets-the-story-of-argentina-and-the-vulture-funds-badly-wrong

The fact is that vulture funds, beside being criminal entities in themselves that launder billions in drug money from their safe haven in the Caymans and such places, have lost every case that has come up in European courts in their claim for a 1,600% payout on these bonds.

Most worrisome for them, this includes cases in British courts - which have jurisdiction over the Caymans ( http://www.democraticunderground.com/110837412 ). It's good to know that there are still incorruptible judges out there.

This, of course, opens the possibility of a multi billion-dollar suit by Argentina for civil damages against them (to say nothing of criminal charges, if it can be determined that Greasa was bribed). And since Paul Singer is a GOP megadonor (who, btw, is believed to have been actively trying to push for another debt ceiling crisis here in the U.S. in order to do the same to U.S. bonds), that would be killing two birds with one stone, wouldn't it.

[DeSwiss]

5. Fuck Citibank! n/t

[Judi Lynn]

8. Aren't you afraid of being labeled as someone not loyal to Citibank?

That's not safe, any more!

[center][/center]

[christx30]

2. Agreed.

If it doesn't, no one is going to buy bonds from them anymore. It'd be a very bad investment.

[forest444]

4. You mean no one's going to buy foreign bonds issued in New York anymore.

Because bondholders who chose restructured bonds under London, Paris, or Buenos Aires law, are still collecting on time and in full - and have for a decade now.

The only problem is with bonds issued out of New York - which has become a veritable Colombia of the financial world, as you know (it may not look like Colombia, but appearances can be deceiving). To be fair, New York law actually forbids the purchase of bonds for the purpose of suing for more later; but Griesa reinterpreted the law entirely (right about the time he bought a sprawling Montana estate...) to suit vulture funds, which exist solely for the very purpose.

And if you think this is only Argentina's problem, think again: the largest of the vulture funds, GOP megadonor Paul Singer's NML (based in the Cayman Islands and banker to the Romneys, among others), has already bankrupted Delphi Automotive (the largest auto parts maker in the U.S. until then) and Caesar's Entertainment.

The Caesar bankruptcy may soon be followed by Atlantic City's as a direct result. Tens of thousands of good jobs lost in the meantime.

[DeSwiss]

6. That's right, kick their asses out of the country.

- These goddamned banks have got to be shown that they are not greater than the people. It's just fucking worthless paper people.

K&R

[lark]

11. Love to see it happen.

Go Argentina, kick out the vultures.