A last-ditch effort is being made by lobbying organizations that represent Wall Street companies to block planned legislation that would restrict creditor lawsuits against nations that fail to make their debt obligations. Hedge funds that are dissatisfied with the conditions of debt repayment that other creditors, such as governments, agree to during restructuring discussions frequently file these cases.
Following Puerto Rico’s financial default, which resulted in the closure of schools and hospitals and the loss of pensions for friends and family on the island, community organizations drafted the bill.
Jessica González-Rojas of Queens, the bill’s Assembly sponsor, was hopeful that the proposal would pass her chamber as well after it cleared the state Senate last week. The Partnership for New York City, a well-known corporate organization that advocates for banks, corporations, and large law firms, has stayed out of the spotlight.
The Assembly is under pressure from four organizations to halt the bill’s progress. The most well-known advocate for corporate interests in Albany is the corporate Council, which represents a wide range of businesses, from Northrop Grumman to National Fuel Gas.
The Securities Industry, the Creditor Rights Coalition, the Financial Markets Association, and the Loan Syndications and Trading Association are the other three national groups that represent the financial industry.
The lobbyists’ claims are detailed in opposition papers that were distributed to assembly members and acquired by New York Focus. According to the organizations, the bill would make borrowing more expensive for nations and would cause businesses to relocate their operations outside of New York.
According to a June 4 document from the Loan Syndications and Trading Association and Creditor Rights Coalition, traders, legal firms, and financial institutions likely earned “substantial revenue” in 2024 from the trading of more than $700 billion in sovereign bonds subject to New York law.
“This business is lucrative and other states know it,”
the groups said, warning that if New York enacted the law, sovereign debt issuance, trading, and litigation may go to other states.
Similar claims were made in a document distributed by the Securities Industry and Financial Markets Association, or SIFMA, on June 4. Two Republican senators, Jack Martins and Mark Walczyk, delivered lengthy speeches against the law during floor discussions prior to the Senate passing the bill. SIFMA’s 2024 statement on the measure was read by Walczyk.
