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Protesters condemn CEOs who profit off Puerto Rico’s debt

Jule Pattison-Gordon
Protesters condemn CEOs who profit off Puerto Rico’s debt
Demonstrators marched outside the Boston headquarters of UBS, one of the investors they charge used predatory lending practices in dealing with the island’s government.

Protestors marched last Wednesday outside the downtown Boston headquarters of USB, a financial services firm that demonstrators claim worsened Puerto Rico’s debt crisis by perpetrating predatory lending.

The protesters sought to raise awareness of what they say are abusive investor practices and show solidarity for Puerto Rico, said Otoniel Figueroa-Duran, demonstration organizer.

The island’s current debt totals more than $70 billion.

On the web

Refund report:

According to a report distributed at the protest, UBS and other financial groups reaped big profits from underwriter fees they received for preparing and facilitating bond deals on the Puerto Rican government’s behalf. In many cases, these bonds were taken out to pay interest on existing debt — which only compounded the economic crisis, because the government acquired new interest to pay back as well as owed fees for each new bond deal’s issuance.

This and an earlier report from the ReFund America Project — an organization supported by the Roosevelt Institute think tank — take the stance that it is morally wrong to compel Puerto Rico to repay debt generated from high interest rates and issuance fees when doing so threatens the vitality of public services, including schools and hospitals. They argue that the creditors knew the financial straits the island was in and sought to profit anyway, encouraging the government to borrow and charging it high fees to do so. Because of that, they argue, those investors should not be given preference over citizens.

“Any debt restructuring must put the interest of the Puerto Rican people first and must ensure that banks and creditors are not able to profiteer off the suffering on the island,” the report states.

Outside UBS headquarters, the group of about 15 demonstrators carried vulture-shaped flags — a reference to the “vulture fund” label activists having been applying to profit-seeking hedge fund investors — and signs depicting the faces of CEOs. Four musicians played brass instruments, drawing attention from passersby, while a handful distributed flyers.

Among the protestors was Yara Liceaga, a writer and teacher who moved to Boston from Puerto Rico a month ago with her five-year-old daughter and eight-year-old-son. When the Puerto Rican private school she worked for downsized, Liceaga was laid off and had trouble finding a new job or an affordable, quality school for her children.

“We had to come to the U.S. to live because of lack of jobs, the failing economy, schools closings, the health care system collapsing — everywhere we looked, there was nowhere to go,” she told the Banner. The move is especially hard on her children, who struggle to adjust to losing their friends and house, and adapt to New England’s more reserved social culture and weather that feels cold even in August, she said.

Another protestor, Rafael Cruc, left the island in 2002, driven out by high prices and lack of jobs, he said.

PROMESA conference

The Boston event coincided with demonstrations in Florida and Connecticut, as well as in Puerto Rico where the first conference on the Puerto Rico Oversight, Management and Economic Stability Act — also known as PROMESA — convened that same day.

The PROMESA conference gathered federal and Puerto Rican elected officials and representatives from business and financial advisory sectors, including bondholders. Boston organizer Figueroa-Duran feared the inclusion of investors could result in a greater push for policies he believes are detrimental to the middle and working class, such as privatization of public services and loss of minimum wage.

UBS’s former managing director was among the conference organizers.

Oversight board

Also that day, the federal government announced the selection of members to an oversight board with broad authority over restructuring Puerto Rico’s finances

Many Puerto Ricans object to the idea of a control board, because Puerto Ricans have no say in its membership. The Puerto Rican governor is a nonvoting member of the board, which includes seven others selected by the White House.

In Figureroa-Duran’s view, the board is problematic regardless of membership and will prioritize investor interests.

“The board is a problem — its sole focus is to collect money. It is a big collection agency for the hedge funds,” he told the Banner. “Any hope we have to live a life of dignity in Puerto Rico will go away.”

The amount of power given to the control board “is humiliating,” protestor Liceaga said.

The presidential appointees include four Republicans, all men: Carlos Garcia, CEO of BayBoston Managers LLC and former chair of Puerto Rico’s Government Development Bank; Andrew Biggs, American Enterprise Institute fellow who had served as principal deputy commissioner of the Social Security Administration during George W. Bush’s presidency; David Skeel, a law professor at the University of Pennsylvania; and Jose Carrion III, president of HUB International CLC, an insurance brokerage firm.

The three Democratic members include Arthur Gonzalez, senior fellow at New York University’s School of Law and former chief of the U.S. Bankruptcy Court in Manhattan; Jose Ramon Gonzales, the CEO of Federal Home Loan Bank of New York; and the board’s sole woman, Ana Matosantos, the president of Matosantos Consulting and former director of the California Department of Finance.

Carrion, Garcia, Gonzalez and Mantosantos were born and raised in Puerto Rico.

“With a broad range of skills and experiences, these officials have the breadth and depth of knowledge that is needed to tackle this complex challenge and put the future of the Puerto Rican people first,” President Barack Obama said in a statement.