Puerto Rico’s Governor Alejandro Garcia Padilla said during a TV appearance on Sunday that the commonwealth needs to focus on providing essential services and so its Government Development Bank will default on a $422m bond payment, a tipping point in arguably the biggest crisis ever in the $3.7tn market that state and local entities use to access financing.
Well before the announcement, frustration and anger had been simmering, not only against the U.S. Congress’s inaction as Puerto Rico’s crisis has worsened, but also directed at hedge funds and others in the financial services industry.
Recently, comedian John Oliver dedicated an entire episode of his HBO show, Last Week Tonight, to call attention to the absurdities of the quagmire that Puerto Rico finds itself in, as it is ineligible for bankruptcy protection. He had some choice words for UBS, whose Puerto Rico closed-end funds have led to significant losses for investors and caused major headaches for the bank.
Then Oliver introduced the Puerto Rican creator and star of the hit Broadway musical “Hamilton,” Lin-Manuel Miranda, who performed a rap song calling out hedge funds and pleading for help for his homeland: “A commonwealth with not a lot of wealth, a not-quite-nation … Vulture funds are circling and lobbying for payouts. There’s nothing left to tax or cut, we’re stuck, we need a way out.”
Separately, a former Citigroup and Merrill Lynch trader, Alexis Stenfors went from generating more than $100m for the latter in 2008 to covering up a half-billion dollars of losses the very next year. He was fired and barred from the industry, effectively ending his investment-banking career and tarnishing his reputation.
So how did he seek redemption? “Mr. Stenfors enrolled in a doctoral program at the University of London. For his thesis topic, he chose Libor manipulation. His theory was that manipulation was inevitable given the way the benchmark was structured and the way banks pushed traders to be aggressive.”
He then landed a plush position as a professor at the University of Portsmouth in southern England, where he uses his own story to highlight teachable moments to aspiring financial services professionals. However, his students have given him mixed reviews in their written evaluations, ranging from “sketchy” and “shady” to “riveting” and “amazing.”
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