Corporate Governing Puerto Rico Into Puerto Pobre Via Predatory Lending
By Luis Ángel
Pérez
Outline & Highlights of Democracy Now!’s News Coverage &
Rush Transcript
Respectively, Titled & Dated …
Puerto
Rico’s Payday Loans:
The Shocking Story Behind Wall Street’s
Role in Debt Crisis, July 15, 2016
“On June 30, …” (2016) “… President Obama signed into law
the PROMESA bill, …”
The PROMESA Bill -
* “… 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.”
“… it is a reversion to old-style colonialism that
removes democratic control from the people of Puerto Rico.”
“Meanwhile, -
* Even
before President Obama has named members of the new control board,
- we’re
beginning to learn just how bond holders are being protected
- and the people of Puerto
Rico made to suffer.”
“… bond
holders are being protected
and the
people of Puerto Rico made to suffer.”
“But does Puerto Rico really owe $72 billion in bond debt & 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 …”
“… nearly
half the debt owed by Puerto Rico is not
actually money … borrowed, but instead interest owed to investors on bonds
underwritten by Wall Street firms …”
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.
“While the …
people are facing massive austerity cuts,
bondholders
… make mind-boggling profits
in … a …
lending scheme.”
Amy Goodman, Democracy Now!
“The ReFund America Project suggests that –
* Puerto Rico
should not be required to pay back much of its debt,
- since
it’s illegitimate.”
“… much of
its debt, … it’s illegitimate.”
“The crux of the crisis centers on what are known as … –
* Capital
Appreciation Bonds.”
“… the
crisis centers on … Capital Appreciation Bonds.”
* “In some cases,
the interest rate will top 1,000 %.
It’s a scandal that –
* received almost
no attention during the recent congressional debate
over the
so-called PROMESA bill …”
“… a scandal
that received almost no attention
during the
recent congressional debate…”
Juan Gonzalez, Democracy Now!
“On June 29, 2016, -
* the
government-owned Puerto Rico electric company
…”
Where
Democracy Now!’s guest Carlos Gallisa
Is said to serves
as Elected Consumer Representative
to The Board
of Directors,
&
who is also an
Attorney, Politician,
Independence Movement Leader, &
Former
Member of the Puerto Rican House of Representatives.
* “… announced its
plan to raise by 28% the island’s electricity rates,
- which are already higher than any state but Hawaii.
The extra money will be –
* earmarked to pay debt service on up to $9.3
billion in new bonds
the company,
known as PREPA, plans to issue to replace its old debt.
As part of the restructuring,
* the utility’s
new directors will come largely from the U.S.,
* & the new
bonds will pay an astounding interest of 10%.”
Amy Goodman, Democracy Now!
“… a very large portion of Puerto Rico’s
debt is actually no debt at all,
* it’s actually interest
on a payday loan, on a series of payday loans,
- in fact,
where the island will be paying four-point –
the
island borrowed $4.3 billion and will pay back $33.5 billion in interest.
* That’s
an effective interest rate of 785%.”
“… the
island borrowed $4.3 billion and
will pay
back $33.5 billion in interest.
That’s an
effective interest rate of 785%.”
Saqib Blatti, Democracy Now’s Guest &
Director of the ReFund America
Project, Fellow at the Roosevelt Institute, &
Co-Author of the new report - Puerto Rico’s Payday Loans
“And what we’re finding is that this is actually just the
tip of the iceberg.
* There’s actually
a lot of the debt that Puerto Rico has entered
into
that is either
–
- legally
or morally illegitimate.”
“… legally
or morally illegitimate.”
“And so, my organization, the
ReFund America Project,
we’re actually going to be
releasing a series of reports
over the next couple of months
that will –
* look at the different ways in which Wall
Street banks
really targeted Puerto
Rico with predatory deals,
* and really calling on the PROMESA control
board
to be putting the interests of the
people of Puerto Rico first,
to cancel the illegitimate debt so that
we can properly fund services.”
“… Wall
Street banks really targeted Puerto Rico with
predatory deals …”
Saqib Blatti, Democracy Now’s Guest &
Director of the ReFund America
Project, Fellow at the Roosevelt Institute, &
Co-Author of the new report - Puerto Rico’s Payday Loans
“They were the lead underwriters on these deals that really
targeted
Puerto
Rico for these immense interest rates.
* … these payday
loans are called capital appreciation bonds.
* And the way
these bonds work -
- is very
much like a payday loan,
- where,
because you’re not allowed to pay back the principal or the interest
for many
years, and over time the interest keeps compounding,
* you
end up with these astronomical interest rates.”
“… these
Payday Loans are called
Capital
Appreciation Bonds.”
“… because
you’re not allowed to pay back
the
principal or the interest for many years,
and over
time the interest keeps compounding,
you end up
with these astronomical interest rates.”
Saqib Blatti, Democracy Now’s Guest &
Director of the ReFund America
Project, Fellow at the Roosevelt Institute, &
Co-Author of the new report - Puerto Rico’s Payday Loans
“ And so, what happened over there was, -
* because you had
the situation where, you know, Puerto Rico is
a colonial economy
and is not in charge
of its own finances at the end of the day,
- there’s
so much pressure that’s coming from outside,
because
those issues couldn’t be resolved.
“… Puerto Rico is a colonial economy …
not in
charge of its own finances …”
In the same way that a cash-strapped family trying to put
food on the table
might go to a payday lender because they have to, to make
ends meet,
* you had, you
know, Puerto Rico trying to put food on the
table,
* run- provide
basic services, needing to find ways to make ends meet.
And banks swooped in –
* banks like
Citigroup, Goldman Sachs -,
* and said, ‘Hey,
here’s a deal,’
- even
though they knew that these deals would be really bad
and Puerto Rico would never be able to pay them in the long
run.”
“In the same
way that
a
cash-strapped family trying to put food on the table
might go to
a payday lender
because they
have to, to make ends meet,
you had, … Puerto Rico trying to put food on the table,
… provide
basic services,
needing to
find ways to make ends meet.”
“And banks
swooped in – … and said,
‘Hey, here’s
a deal,’
even though
they knew that these deals
would be
really bad and Puerto Rico would never be able
to
pay them in
the long run.”
Saqib Blatti, Democracy Now’s Guest &
Director of the ReFund America
Project, Fellow at the Roosevelt Institute, &
Co-Author of the new report - Puerto Rico’s Payday Loans
For
example, according to this news coverage, a 2007 sales tax bond for $97 million
…
*“… was supposed
to be paid back in 2054.
* That means for 47 years,
- the banks agreed, you don’t pay us any
principal,
and you don’t pay us any interest
*
for 47 years.
* And at the end
of the 47 years,
* that $97 million becomes $1 billion
that Puerto Rico
has to pay back.
- That’s a thousand times what the
original loan was.
* So, the banks had to know that there
was no way that
Puerto Rico could pay this back,
- but yet they continued
to issue these bonds.”
“… at the
end of the 47 years, …
$97 million
becomes $1 billion …
That’s a
thousand times what the original loan was.”
“… banks had
to know that there was no way
that Puerto Rico could pay this back,
but yet they
continued to issue these bonds.”
Juan Gonzalez, Democracy
Now!
“It’s a complete outrage. And what you said is exactly
right, -
* that banks knew
… there’s no way that Puerto Rico can pay all
this back.
Puerto Rico’s debt per
capita burden is -
* 10 times higher
than the average of U.S.
states.
It’s a tiny island of -
* three-and-a-half
million people.
Banks knew that they couldn’t do this. -
* Banks … still
targeted Puerto Rico for these deals,
because they got to make money on the front
end.
For just these capital appreciation bonds, these payday
loans, just for a slice of them, -
* banks got to
make $221 million in fees.
* And they get to
offload the risk.
“It’s a
complete outrage.
Puerto
Rico’s debt per capita burden is 10 times higher than the average of U.S. states.
It’s a tiny
island of three-and-a-half million people.
… Banks knew
that they couldn’t do this.
Banks …
still targeted Puerto Rico for these deals,
because they
got to make money on the front end.”
“… there’s a secondary market for bonds,
* just like
there’s a secondary market for mortgages,
- where
the lender that sells you your mortgage,
they
package it up into a security,
* they
sell it off,
- and it gets traded.”
“… there’s a
secondary market for bonds …”
“Same thing with bonds,
* they get sold
off and traded.
A lot of these bonds now,
* because the
investors originally … didn’t believe they would be paid back,
- they
actually absorbed the losses and sold the bonds
for 15
cents on the dollar, as low as 5 cents on the dollar.”
“… they
actually absorbed the losses and
sold the
bonds for 15 cents on the dollar,
as low as 5
cents on the dollar.”
“And so, a lot of the investors that are now buying it,
* which are these
vulture hedge funds that are buying at dirt-low prices
and trying to make a huge profit,
- profits
up to … 2,000 %,
- if you’re
buying at 5 % and planning on trying to collect all 100.”
… vulture
hedge funds … are buying at dirt-low prices
and trying
to make a huge profit,
profits up
to … 2,000 %,
if you’re
buying at 5 % and
planning on
trying to collect all 100.
“… just to put that into perspective, -
* … there’s
something that theoretically on its face is worth one dollar ($1),
and I’m
going to pay you five cents ($ .05) to buy it up.
* And so,
even if I get back a small portion of –
- even
if I get back ten cents ($ .10),
* I’ve doubled my profit.
* And what
they’re trying to do is collect not just the full dollar,
* but
then 800 % interest on the dollar.”
For Example:
“… something
… theoretically ... is worth one dollar ($1),
and I’m
going to pay you five cents ($ .05) to buy it up.
… even if I,
(sell
it off and) , get back ten cents ($ .10),
I’ve doubled
my profit.
And what
they are trying to do is collect
not just the
full dollar,
but then 800
% interest on the dollar.”
“… there’s a devastating humanitarian crisis.
* I believe about
40% of the children live in poverty.
* We’ve seen mass
closings of schools.
* … there is
severe cuts to healthcare at the same time there’s a Zika outbreak.
We need to make sure, if there’s a PROMESA control board,
that –
* they are not
cutting services further.
* They need to
challenge the illegitimate debt.”
“… a
devastating humanitarian crisis.”
“… about 40%
of the children live in poverty.”
“We’ve seen
mass closings of schools.”
“… severe
cuts to healthcare at the same time
there’s a
Zika outbreak.”
Saqib Blatti, Democracy Now’s Guest &
Director of the ReFund America
Project, Fellow at the Roosevelt Institute, &
Co-Author of the new report - Puerto Rico’s Payday Loans
“We are in a very difficult position now,
* and there will
be more [inaudible] to migration to the United States.
* There will be a
reduction in the government employees.
And [inaudible] that happened in New York before and
in Detroit
will happen [inaudible] once the control board comes into effect.”
“The power company of Puerto Rico,
which is the most important public corporation
in the [inaudible],
is going through a restructuring of its debt.
* The debt of the
power company is close to $9 billion,
out of the $70
billion that the government of Puerto Rico
owes.
* The debt service
is $700 million a year.
And in order
for the power company to meet its obligations,
the Energy Commission
of Puerto Rico …”
will
repeatedly increase the electricity bill,
* “… then the
people of Puerto Rico will have to pay
all these
increases in its electricity bill.”
“The Legislature of Puerto Rico approved a bill …
that the government of Puerto Rico
has to appoint a new board of directors, …
* And that’s another
imposition of the bondholders, …
- … they want to have a seat in the board
of directors.”
“We are in a
very difficult position now …”
“… there
will be more [inaudible] to
migration to
the United States.”
“There will
be a reduction in the government employees.”
“And
[inaudible] that happened in New York
before and
in Detroit will happen
[inaudible]
once the control
board comes into effect.”
“The debt of
the power company is close to $9 billion,
out of the
$70 billion
that the
government of Puerto Rico owes.”
“The debt
service is $700 million a year.
And in order
for the power company to meet its obligations,
the Energy
Commission of Puerto Rico …”
will
repeatedly increase the electricity bill,
“… then the
people of Puerto Rico will have to pay
all these
increases in its electricity bill.”
“And that’s
another imposition of the bondholders …
… they want
to have a seat in the board of directors.”
Carlos Gallisa (accent on last “a”) Democracy Now’s Guest &
Attorney, Politician, Independence
Movement Leader,
Former Member of the Puerto Rican House of Representatives,
Now Serves on the Board of Directors of The Puerto
Rico Electric Power Authority,
As the Elected Consumer Representative on the Board
(a board which is said to be government owned)
“… they’re going to accept 85 cents for every dollar that
they‘re owed,
* but then they’re
– in new bonds.
* But the new
bonds have a much higher interest rate. Right?
- Isn’t it
10% now these bonds will require?
* Which
is astounding when you consider
most municipal bonds in this country are like 3%, 4%.
* Puerto Rico
is going to have to pay 10% for the electric company bonds?”
“… the new
bonds have a much higher interest rate.
Which is
astounding when you consider
most
municipal bonds in this country are like 3%, 4%.
Puerto Rico is going to
have to
pay 10% for
the electric company bonds?”
Juan Gonzalez, Democracy Now!
“That’s it.
* … we are paying
10, 11 % interest now on the new bonds
that are going
to be issued.”
“… we are
paying 10, 11 % interest now
on the new
bonds
that are
going to be issued.”
Carlos Gallisa (accent on last “a”) Democracy Now’s Guest &
Attorney, Politician, Independence
Movement Leader,
Former Member of the Puerto Rican House of Representatives,
Now Serves on the Board of Directors of The Puerto
Rico Electric Power Authority,
As the Elected Consumer Representative on the Board
(a board which is said to be government owned)
“… it’s amazing to me that this
continues to occur,
* for the protection of the bondholders, …
* Whether it’s in … these payday loans that
…
somehow or other – someone is going to
make
a whole lot of money off the
restructuring of these payday loans,
* and now, with the electric company,
- these much higher interest rates
that will be required of Puerto Rico.”
“… it’s
amazing to me that this continues to occur,
for the
protection of the bondholders, …
… someone is
going to make a whole lot of money off
the
restructuring of these payday loans,
and now, with
the electric company …”
“… Carlos Gallisa,
* your sense of how the people of Puerto Rico are reacting to these latest events,
in terms of the increases in the rates
and the new information that’s coming out
in the last few weeks since PROMESA was
passed?”
Juan Gonzalez, Democracy Now!
“… demanding to end this situation, because, basically,
* the problem of Puerto Rico is colonialism.
* The people of Puerto Rico do not have the freedom
to do the
things [inaudible] have to do to look for a solution to this crisis.
* So, this is a
political problem, besides being an economic problem.”
“… the
problem of Puerto Rico is colonialism.
The people
of Puerto Rico do not have the freedom
to do the
things [inaudible] have to do to
look for a
solution to this crisis.
So, this is
a political problem,
besides
being an economic problem.”
Carlos Gallisa (accent on last “a”) Democracy Now’s Guest &
Attorney, Politician, Independence
Movement Leader,
Former Member of the Puerto Rican House of Representatives,
Now Serves on the Board of Directors of The Puerto
Rico Electric Power Authority,
As the Elected Consumer Representative on the Board
(a board which is said to be government owned)
Wall Street
Firms Allegedly Complicit in This Predatory Scam
As Per This News
Coverage:
Goldman
Sachs
Citigroup
Merrill
Lynch
Morgan
Stanley
Bank of America
UBS
Investment
Banco Santander
Santander Securities
AG Edwards
Bear Stearns
Lehman
Brothers
Popular
Securities
Puerto
Rico’s Payday Loans:
The Shocking Story
Behind Wall Street’s Role in Debt Crisis
Democracy Now! with
Amy Goodman & Juan Gonzalez, July 15, 2016
- with quests -
Saqib Blatti, Democracy Now’s Guest &
Director of the ReFund America
Project, Fellow at the Roosevelt Institute, &
Co-Author of the new report - Puerto Rico’s Payday Loans
&
Carlos Gallisa (accent on last “a”) Democracy Now’s Guest &
Attorney, Politician, Independence
Movement Leader,
Former Member of the Puerto Rican House of Representatives,
Now Serves on the Board of Directors of The Puerto
Rico Electric Power Authority,
As the Elected Consumer Representative on the Board
(a board which is said to be government owned)
Awareness Is Power So
Please Continue To Follow
Luis Ángel
Pérez
Degrees in
Psychology & Education
Mental Health
& Social Services Counselor, Public School Science & Mathematics
Middle School-
Seventh & Eighth Grades, Elementary School- First & Fourth Grades
Educator &
Advocate
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