Puerto Rico's Payday Loans: The Shocking Story Behind Wall Street's Role in Debt Crisis

[think]

Puerto Rico's Payday Loans: The Shocking Story Behind Wall Street's Role in Debt Crisis

July 15th 2016

On June 30, President Obama signed into law the PROMESA bill, which will establish a federally appointed control board with sweeping powers to run Puerto Rico’s economy. While the legislation’s supporters say the bill will help the island cope with its debt crisis by allowing an orderly restructuring of its $72 billion in bond debt, critics say it is a reversion to old-style colonialism that removes democratic control from the people of Puerto Rico. But does Puerto Rico really owe $72 billion in bond debt—and to whom? A stunning new report by ReFund America Project reveals nearly half the debt owed by Puerto Rico is not actually money that the island borrowed, but instead interest owed to investors on bonds underwritten by Wall Street firms including Goldman Sachs, Citigroup, Merrill Lynch and Morgan Stanley. While the Puerto Rican people are facing massive austerity cuts, bondholders are set to make mind-boggling profits in what has been compared to a payday lending scheme. For more, we speak in San Juan, Puerto Rico, with Carlos Gallisá, an attorney, politician and independence movement leader. And in New York, we speak with Saqib Bhatti, director of the ReFund America Project and a fellow at the Roosevelt Institute. He is co-author of the new report, "Puerto Rico’s Payday Loans."

TRANSCRIPT

This is a rush transcript. Copy may not be in its final form.

JUAN GONZÁLEZ: A stunning new report has just been released on Wall Street’s role in creating Puerto Rico’s $70 billion debt crisis. According to the ReFund America Project, nearly half of the debt owed by Puerto Rico is not actually money that the island borrowed, but instead interest owed on bonds underwritten by Wall Street firms that include Goldman Sachs, Citigroup, Merrill Lynch, Morgan Stanley, Bank of America, etc. While the Puerto Rico—while the Puerto Rican people are facing massive austerity cuts, bondholders are set to make mind-boggling profits in what has been compared to a payday lending scheme. The ReFund America Project suggests that Puerto Rico should not be required to pay back much of its debt, since it’s illegitimate.

The crux of the crisis centers on what are known as capital appreciation bonds. According to the ReFund America Project, Puerto Rico borrowed $4.3 billion using this costly and risky form of debt. When the bonds expire decades from now, Puerto Rico will have to pay back $33.5 billion in interest—a staggering 785 percent interest rate. In some cases, the interest rate will top 1,000 percent. It’s a scandal that received almost no attention during the recent congressional debate over the so-called PROMESA bill, which will establish a federally appointed control board with sweeping powers to run Puerto Rico’s economy.

Read more:
http://www.democracynow.org/2016/7/15/puerto_ricos_payday_loans_nearly_islands

[rurallib]

1. link? is there more?

[think]

2. Sorry about that. Thank you for catching it. Fixed. There's much more at the link.