Puerto Rico's Development Bank on Brink as Debt Gambit Goes Bad
- `It's going to be a day of reckoning,' former bank chief says
- Regulator says it's insolvent, facing $1.3 billion shortfall
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Puerto Rico’s Government Development Bank, which was set up after the Great Depression to chart a course out of poverty, is on the verge of a collapse that would deepen the Caribbean island’s $70 billion debt crisis.
The lender was designed to promote business investment with a long-term horizon, but in recent years politicians turned it into a piggy-bank that lent to the government and its agencies, helping keep them afloat as the island’s economy shrunk. Now it’s rapidly running out of cash and poised to default on a $422 million debt payment due in May -- raising the risk that it may be pushed into receivership or broken up.