At a committee hearing on Thursday, Sens. Bernie Sanders and Elizabeth Warren accused Wall Street bankers and fund investors of bleeding Puerto Rico’s economy dry in an attempt to maximize returns on high interest rates. Instead of recklessly driving Puerto Rico further into crippling debt, Sanders and Warren have called for these financial institutions to allow Puerto Rico to restructure its debt in a way that protects residents, ordinary investors, and pension funds in the U.S.
“The economic situation in Puerto Rico will not improve by eliminating more public schools, slashing pensions, laying off workers, and allowing corporations to pay workers starvation wages by suspending the minimum wage and relaxing labor laws – you simply cannot get blood out of a stone,” Sanders said during the Energy and Natural Resources Committee hearing. “I find it morally repugnant that vulture funds and Wall Street investment banks have been calling for even more austerity in Puerto Rico. In my view, the people in Puerto Rico should not be forced to suffer even more so that a handful of wealthy investors can make a 100 percent return on their investments.”
“They want Puerto Rico to raise taxes, cut health care, fire teachers, cut pensions, sell off $4 billion worth of government buildings, privatize public ports, close neighborhood schools, and cut support for the University of Puerto Rico, all so these vulture funds can squeeze out more profit,” Warren added.
In a letter sent Wednesday to U.S. Treasury Secretary Jacob Lew, Sanders wrote, “Since 2006, Puerto Rico has lost 20 percent of its jobs. About 60 percent of Puerto Rico’s adult population are unemployed or are not looking for work. Over the last five years alone, more than 150 public schools have been shut down, and the childhood poverty rate has shot up to 56 percent. At a time when the rich are getting richer, Puerto Rico now has more income inequality than any U.S. state.”
In his letter, Sanders requested that Secretary Lew meet with Puerto Rican officials, conduct a transparent audit of Puerto Rico’s debt, ensure the territory is given the same bankruptcy protections as cities in the U.S., and increase the level of federal dollars Puerto Ricans receive for health care.
“Treasury needs to step up and show more leadership here,” Warren asserted. “When the banks were in trouble, Treasury did a lot more than just bail them out. Treasury stretched the limits of its authority to make sure that the banks stayed afloat. It helped broker deals between banks. It applied pressure to get parties to accept deals they may not have liked very much.”
“Now the people of Puerto Rico are calling. They understand there is no bailout on the table for them and they are not asking for one. After all, they aren’t a giant bank. But they are asking the administration to do what they can do what it can to help broker deals to stand up to the vulture funds,” Warren continued.
As Wall Street bankers and fund investors continue making a profit at the expense of Puerto Rico’s failing economy, Sanders noted, “They are receiving 11 percent [interest rates] and children in Puerto Rico are going hungry – somehow that equation does not make a lot of sense to me. They made risky investments. And when you make a risky investment, you should not expect to get 100 percent back on your dollar.”