MONDAY, MONDAY...

...so bad to me.  There is zippo of interest happening anywhere.  Given the lack of current events I though I just might touch on one of the more bizzar things playing out in that singularly dreadful political spot called Argentina.

It all goes back to the famous Griesa ruling which banned the payment of interest to the restructured bonds through the enforcement of the parri passu payments provision of those bonds subject to U.S. law  (the Law of the State of New York actually).  But what happens when a banking institution, subject to that ruling, operates in Argentina and gets precisely the opposite instructions from the Argentine government?  Wait, it gets worse.  What happens when the same institution is the trustee and paying agent for Argentine bonds governed by Argentine law?  In the banking business it's known as buggered.

Anyway, that is precisely the case in which Citibank found itself.  It petitioned the court in New York to allow them to obey the request of the Argentine government and was told nothing doing.  So what did the Argies do.  They fired the head of Citibank!   I mean, have you ever hear of nonsense such as this!  I haven't, but in the mean time, some very interesting issues are raised.

The bonds under Argentine law are not subject to the ruling of the court in New York.  But the currency of the bonds is the U.S. Dollar.  Now ever since I was a pup it was assumed that the place of payment of a U.S. dollar obligation was the United States irrespective of governing law or the nationality--or domicile--of the institution making the payment.  Indeed, that was the original definition of a Eurodollar: an obligation to pay dollars from an account in the United States to a person not resident in the United States  or to reverse the thought, a claim upon a deposit in the United States.  So come on, what's a girl to do?  If that is correct, Citibank is clearly at the mercy of Judge Griesa and the poor manager, who is damned if he does and damned if he doesn't is on food stamps (not quite).  Well, I thought that this was simply and amusement as Graham Greene might have called it until I got a call from my Really Smart Friend, Larry who asked, "What's a place of payment clause?"  Stumped.

It turns out that The Great Buchheit of whom I have oft spoken has come up with a little gem to avoid the effects of a parri passu clause on agreements written under the laws of the State of New York or other such dastardly jurisdictions.  He is arguing that if the docs make not statement as to where any payment should be made it can be made anywhere designated by the borrower which of course has the effect of...well, you get the picture.  This came about not as a result of Argentina but in regard to Cyprus.  Fancy that.

Now I am going to stop right here before I get into real trouble, but I am going to find out more about this.  Keeps me out of trouble but then again I still have this feeling that we all would be better off if people payed what they owe...especially to banks who as we all know do God's work.