News Is My Business / October 23, 2015
By Larry Luxner
WASHINGTON — The two most prominent progressives in the U.S. Senate urged the federal government Thursday to help Puerto Rico stand up against the “vultures” they largely blame for the island’s current fiscal nightmare.
Sen. Bernie Sanders (I-VT), the chief rival of candidate Hillary Clinton for the 2016 Democratic presidential nomination, took time out of his packed campaign schedule to engage five witnesses — including Puerto Rico Gov. Alejandro García-Padilla — who testified at a hearing by the Senate Committee on Energy and Natural Resources.
Sanders, reeling off a raft of statistics on Puerto Rico’s demographic and fiscal decline, called the island’s 56 percent poverty rate among children a “human tragedy.”
“Wall Street should not believe they can get blood from a stone when people are suffering and hurting,” said Sanders, one of 11 Democrats on the 22-member Senate committee. “You cannot continue to squeeze them.”
On Wednesday, Sanders sent a letter to U.S. Treasury Secretary Jacob Lew asking the White House to meet with Commonwealth officials; conduct a transparent audit of the island’s $73 billion debt; ensure Puerto Rico is given the same bankruptcy protection as U.S. cities, and boost the level of federal dollars Puerto Ricans receive for health care.
The veteran lawmaker from Vermont said he not only supports eliminating the federal cap on Medicaid funding “but would go further to include Medicare as well.”
He noted that 60 percent of the island’s adult population is either unemployed or have given up looking for work, and that more than 150 public schools have closed in the last five years alone.
“In the midst of this human suffering, I find it morally repugnant that vulture funds and Wall Street investment banks have been calling for even more austerity in Puerto Rico,” he fumed. “The last thing Puerto Rico needs right now is more austerity.”
Never one to shy away from pointing fingers, Sanders said Congress must demand that “huge financial institutions that have received hundreds of millions in fees to manage Puerto Rico’s bond sales play an active role in giving Puerto Rico the time it needs to grow its economy and pay back its debt. And that includes Goldman Sachs, Citigroup and UBS.”
Directing his comments to Treasury Undersecretary Antonio Weiss, Sanders said “the secretary of the Treasury and you should call a meeting with all the players — including representatives of labor unions. Sit down with the vulture funds and work out an agreement that is satisfactory to both sides.”
He added: “The goal cannot be to protect high interest rates going to vulture funds. They made risky investments, and when you make risky investments, you should not expect to get 100 percent back on your dollar.”
As an aside, Sanders also chided the struggling Puerto Rico Electric Power Authority (PREPA) for depending too much on fossil fuels.
“I have not heard one word today on sustainable energy,” he said. “Puerto Rico today produces 55 percent of its electricity from oil, 28 percent from natural gas, 16 percent from coal and only 1 percent from renewables. You are a sunny island. There’s wind. I do not understand why you’re not investing in sustainable energy.”
Warren, a Harvard Law School professor of bankruptcy law before going into politics, said the Treasury Department “needs to step up and show some real leadership” when it comes to the island’s worsening fiscal crisis.
“Who owns Puerto Rico’s debt?” she demanded. “Many of these owner are so-called vulture funds who wait until the borrower is in trouble so they can buy the debt at a discount and make a profit. What do they want Puerto Rico to do, fire teachers? Cut pensions? Cut health care? Privatize public ports, close neighborhood schools and cut support for the universities — all so these vulture funds can squeeze out more profits?”
Warren, who chaired the Congressional Oversight Panel following the 2008 financial crisis, became the first female senator from Massachusetts in 2011 and has been frequently mentioned as a future presidential candidate.
The lawmaker, a fierce critic of the U.S. banking system, said Puerto Rico’s 3.5 million inhabitants “understand there is no bailout on the table and they’re not asking for one” — but that they are asking the Obama administration to stand up for them.
“Puerto Rico is not trying to protect its profitability, it just wants make sure its families have a chance to build a future for themselves,” said Warren, who, like Sanders, has built her reputation as a fierce critic of Wall Street. “I urge Treasury to be as creative when it comes to helping Puerto Rico as it was when the big banks called for help.”