Much of that pressure is coming from political leaders in heavily Hispanic areas of this country, and from pro-labor groups critical of major U.S. hedge funds that have scooped up a big portion of Puerto Rico’s $72 billion debt hoping to make a financial killing.
SAUL LOEB/AFP/GETTY IMAGESPresident Obama has thus far done nothing to aid Puerto Rico, but that could change as Hispanic members of Congress push Washington to take action.
This week, several Hispanic members of Congress wrote Treasury Secretary Jacob Lew asking him to intervene to prevent an “economic catastrophe” for the island’s 3.6 million U.S. citizens. The Treasury Department should “bring creditors and debtors to the table to resolve this crisis immediately, as it did in the financial crisis of 2008,” Rep. Nydia Velazquez (D-N.Y.) said.
Last week, Gov. Cuomo led a delegation of New York leaders to San Juan to back the request by Gov. Alejandro García Padilla that Congress allow Puerto Rico’s cities to file for bankruptcy protection as municipalities in the 50 states are allowed to do.
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On Oct. 14, Puerto Rican leaders will hold a nationwide summit in Orlando, to bring further attention to the issue.
bring further attention to the issue.
“We’re convening here because Orlando is now the epicenter of the Puerto Rican diaspora in the U.S.,” Betsy Franceschini, director of Florida’s Puerto Rico Federal Affairs Administration, told me.
The 2010 Census found Orlando’s metropolitan area was second only to New York City’s in the size of its Puerto Rican population — at more than 300,000. But that number has skyrocketed since, as an estimated 50,000 people a year have fled the island’s deteriorating economy, the bulk of them settling in Florida.
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Given that state’s importance in presidential races, summit organizers are sending a clear message to White House candidates from both parties: Tell us your stance on the Puerto Rico financial crisis.
Meanwhile, some labor advocates in New York City will call this week for the city’s municipal pension system to divest more than $500 million from a handful of hedge funds that have invested in Puerto Rico bonds and fought the island government’s pleas to delay or reduce debt service.
Joe Marino/New York Daily News Gov. Cuomo (r.) meets the governor of San Juan, Alejandro Garcia Padilla, on Sept. 7 in Puerto Rico.
Debbie Egan-Chin/New York Daily News Rep. Nydia Velazquez (D-N.Y.) wants the Treasury Department to bring creditors and debtors to the table to resolve the financial issues affecting Puerto Rico.
Gov. Cuomo (r.) meets the governor of San Juan, Alejandro Garcia Padilla, on Sept. 7 in Puerto Rico.
Among the funds the advocates plan to target are Fir Tree Partners, Brigade Capital, and D.E. Shaw, two sources said.But municipal union leaders who sit on those pension boards say it’s not as easy to divest from specific hedge funds as it is, for example, to sell stock in a publicly traded company, because hedge funds often require long-term contracts.
A few union leaders are instead pressing for the city pension systems to divest from all hedge funds as an asset class, something the California Public Employees Retirement System did last year.
“Hedge funds have been underperforming the market for years, yet they gouge our pension system with ridiculous fees,” one municipal pension trustee said.
And it’s not simply a question of stretching out or reducing payments to Puerto Rico’s bondholders. Given the enormous control Congress exercises over the island’s economy, there must be a realistic plan to grow its economy — one that doesn’t just demand lower wages, higher taxes, and less spending on education for the most impoverished group of U.S. citizens.
jgonzalez@nydailynews.com
BY JUAN GONZALEZ
Gonzalez: Pressure grows on Congress to help Puerto Rico
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