‘Failed to take into account how complex the situation is’Friday, July 25, 2014
New York Times questions Griesa’s role
With no agreement reached so far between the government and holdouts, The New York Times pointed fingers yesterday at US Judge Thomas Griesa and questioned his role in charge of the long-term legal battle. Journalist Floyd Norris at the “Business Day” section analyzed the case and said Griesa “failed to take into account how complex the situation is.”
“Only now is he learning how complicated life can be for a judge seeking to control actions by a sovereign government and issuing orders that are supposed to be binding on those who would ordinarily never be within the jurisdiction of an American court,” said Norries in a piece published yesterday. “Griesa failed to take into account just how complex the situation is.”
Griesa held a hearing on Tuesday and denied Argentina’s third formal stay request and ordered the country and holdout investors to meet with court-appointed mediator Daniel Pollack to negotiate until a settlement is reached. At the same time, Griesa didn’t decide what to do with the US$539 million sent by the government to pay its creditors.
“This week’s hearing made clear that he had not completely understood the bond transactions that he had been ruling on for years,” said Norries in a piece published yesterday. “Other judges had ruled that Argentina owed the money, but those rulings were, in practice, unenforceable against a sovereign state. Judge Griesa came up with a legal interpretation to put teeth in the rulings.”
According to Norries, Griesa’s order for Argentina not to make interest payments on exchange bonds only covered those bonds issued under New York law and forgot about bonds issued under foreign legislation. “He ignored the existence of other exchange bonds,” the New York Times journalist said. Because of that Citibank was able to pay local bondholders without any problems.
“It turned out that he did not know much about those Argentine-law bonds. Told that the bonds in question were exchange bonds, and that they accounted for nearly a quarter of all the exchange bonds, he said he had not realized that and reversed course,” Norries said. “It was not bad theatre, but it hardly inspired confidence in the American legal system.”
The New York Times journalist said a default “is almost certain to happen” next week when the 30 days grace-period ends and said Griesa now has “a lot to think about” because of that. “It would be better if he had done some of that thinking before he issued his order, or if the appeals court or the Supreme Court had forced him to do so,” Norries said.
Following the same train of thought, journalist Silvina Sterin Pensel said yesterday when reporting the news about the case that Griesa “wasn’t capable of following the meeting held at his own chamber” and described him as “confused” because of asking “almost seven times the same questions.”