The United States Senate passed Puerto Rico debt legislation 68-30. President Obama will sign the legislation Thursday before Puerto Rico likely defaults on nearly $2 billion in debt payments. The legislation passed with majorities from both parties.
"The Senate put partisanship aside and put Puerto Rico's children first," noted Eric LeCompte, executive director of the religious development coalition Jubilee USA. "This legislation stops predatory behavior and identifies the need to urgently reduce child poverty on the island."
The Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) contains tools to restructure the US Territory's debt and establishes a fiscal oversight board. Puerto Rico faces a $72 billion debt and its Governor says the US territory will default on debt payments July 1. The legislation passed the House 297-127 on June 9th. Republicans and Democrats initially proposed less ambitious legislation in 2015 that did not pass.
Owners of Puerto Rico government debt filed suit to undo a debt moratorium law passed by the island's government in April. Puerto Rico owes more than $70 billion in debt and nearly $2 billion is due July 1. The US Senate is debating a bill (the Puerto Rico Oversight, Management and Economic Stability Act, or "PROMESA") passed June 9 by the House of Representatives that restructures Puerto Rico's debt and blocks debt lawsuits against its government.
Eric LeCompte, executive director of the religious development coalition Jubilee USA, releases the following statement:
"I'm not surprised by this lawsuit. If the debt moratorium is thrown out and Congress doesn't intervene, we'll see a race to the courthouse. That's why it's so important that we set up a clear restructuring system that protects both creditors and Puerto Rico's people.
From: Roberto O. González Nieves, OFM, Archbishop of San Juan de Puerto Rico and Reverend Heriberto Martínez, General Secretary of Puerto Rico's Bible Society and Coordinator of the Ecumenical and Interfaith Coalition of Puerto Rico
Almost a year ago, our Governor publicly stated that Puerto Rico’s debt had become unpayable. Already at that time, our island was experiencing self-imposed austerity conditions. More schools continued to close, healthcare budgets slashed, police were laid off and we were taking from our pensions to pay the debt. In less than a year, the situation has become much worse.
This financial crisis has a human cost on our people and, especially, an unacceptable cost on our children.
In our homeland, 56% of children live in poverty.
The irony of Puerto Rico's financial crisis is not lost on us. The vulnerable, the least among us, had nothing to do with causing this crisis and they are the ones most affected by the crisis.
In response to the Governor’s announcement that the debt was no longer sustainable, Puerto Rico's Ecumenical and Interfaith Coalition focused on the debt. Aided by Jubilee USA Network in these early moments, before the world was watching, we analyzed the debt and the implications of the growing financial crisis.
As shepherds of our flocks on the island, we called for a solution that would invest in Puerto Rico. As the world started to realize that a humanitarian crisis was unfolding in Puerto Rico, the leaders of our coalition called for debt relief. We called for a solution found in our Bible, the solution of Jubilee.
In a statement last August, we said that any solution to the crisis must achieve the following:
1) There should be no more imposed austerity policies affecting our people, especially poor families and young people who are among the most vulnerable.
2) Any solution must create an investment in the Puerto Rican people and seek to grow our economy.
3) We need enough debt relief to bring our total debt back to sustainable levels.
4) We encourage all solutions that enhance Puerto Rico’s laws on budget transparency.
5) We seek greater participation in resolving this crisis and working with the government on solutions that protect Puerto Rico’s people.
6) In addition to the participation of the religious sector, we call for a multisectorial participation in which our people are well represented, including the poorest because they are always the most affected.
Since we began our efforts to address the crisis, we have also seen the statistics regarding our children become even more dire. Therefore, any solution to this crisis must reduce child poverty on our island.
With reducing child poverty and our 6 principles in mind, we advocated for every solution that we thought could be possible. Working with US religious groups and Jubilee USA, we called for debt restructuring solutions from the Federal Reserve, the US Treasury, the White House and the US Congress. We left no stone unturned in our advocacy for a solution.
Last year, we started to meet with the Governor to support him in seeking a negotiated solution with the island’s creditors. We also began to appeal directly to leaders of the various creditor groups. We began a process that would convene the leadership of various creditor groups to meet with the Governor.
On May 10, with the assistance of Mr. Eric LeCompte and Jubilee USA, we successfully convened a meeting with Puerto Rico’s Governor and a representative group of major creditors.
The two of us represented our island’s Ecumenical and Interfaith Coalition to host and facilitate this first ever dialogue among principal actors. We held the meeting at the Church of St. Francis of Assisi in New York City. Saint Francis remains one of our greatest peacemakers and it was fitting that we would work for reconciliation in a church named after him.
It had been difficult to convene this first meeting. However, once the first meeting finally happened, we could feel the possibility of reconciliation. We believe that our Governor showed great leadership for our people at this meeting. He powerfully articulated how he felt compelled to provide medicine for hospitalized children before making bond payments.
We also continue to be impressed by many of the creditors that we have met with.
At the meeting, the creditors who came demonstrated a clear willingness to help resolve the crisis. We were moved by how many of the creditors told the Governor that they invested in his leadership and they wish to invest in Puerto Rico for a long time.
After building a great deal of trust in May, we saw the trust begin to dissipate as more adversarial language played out in media interviews and in court rooms between Puerto Rico’s government and creditors. Although we were successful in eventually setting another meeting between creditors and the Governor for Tuesday June 21st at the Church of St. Francis of Assisi in New York City, we no longer feel we can have a productive meeting with a comprehensive group of participants.
With heavy hearts we are canceling this June 21st meeting. If parties are interested in reconvening after July 1st with our assistance, we are willing to try again. If current legislation in Congress passes, it could provide incentives for all sides to come back to the table.
However, we believe that all parties must come to the table in true "Good Faith." Every one of us must be willing to come to the table with humility and with a sense of shared responsibility and shared sacrifice. Fundamentally, we are not dealing with a situation of bad people, we are all victims of a bad situation.
We continue to hope and pray we can have a process that protects Puerto Rico’s people and respects the rights and dignity of Puerto Rico's government and creditors. We are reminded that Pope Francis, has called us all to reconciliation in this holy year. The Holy Father has called for this year to be a Jubilee Year of Mercy. We pray that we can all unite as partners to answer the invitation of Pope Francis.
Read Archbishop González's recent article on pending Puerto Rico debt legislation in The Hill
Read a timeline of Puerto Rico's debt crisis
Religious leaders from Puerto Rico and the US mainland meet with Senators today and tomorrow to urge them to support legislation to restructure Puerto Rico's debt. The leaders, including Reverend Enrique Camacho, the head of Catholic Charities affiliated Caritas Puerto Rico, will hold a prayer service and a briefing at the US Senate.
"Religious leaders know the urgency of the situation and it's religious leaders on the front lines of the humanitarian crisis," noted Eric LeCompte, Executive Director of the religious development coalition Jubilee USA, which organized the Senate meetings and events. "Until we have a solution, every day that passes means more pain for Puerto Rico's people."
The briefing includes US House of Representatives members who supported companion legislation that passed in the House last week, the Puerto Rico Oversight, Management, and Economic Stability Act.
Ahead of a likely House vote this week, San Juan's Roman Catholic Archbishop, Roberto González Nieves OFM, announced his support for Puerto Rico debt crisis legislation in an op-ed to The Hill.
"I support the current legislation because it gives Puerto Rico breathing space – so the payment of pensions and social services are made first, before debt payments," the Archbishop wrote in his op-ed about the Puerto Rico Oversight, Management and Economic Stability Act's debt restructuring provisions. "The legislation stops exploitative behavior of so-called vulture funds and has a process to bring our debt back to sustainable levels."
While supporting the legislation as "protecting the common good," González expressed concern about the economic oversight board that the Congressional action establishes. In The Hill, he noted the roots of the crisis are found in Puerto Rico's political status and the religious leader called on Puerto Rico's people to "see this visitation of a control board on our island as a wake-up call."
The Consumer Financial Protection Bureau releases new rules today governing "payday" lending - high interest loans that affect low-income communities. New regulations assess a borrower's ability to repay loans and meet basic living expenses. Payday lenders are now prevented from directly withdrawing funds from a borrower's bank account under certain circumstances.
French authorities raided the Paris offices of Google Ireland, an international division of the US founded internet giant. The raid seeks to determine whether Google has established itself permanently in Paris and thus is subject to taxation. Google claims this office merely provides back office functions like marketing and does not generate revenue.
Eric LeCompte, executive director of Jubilee USA, a religious development coalition that monitors how global fiscal policies affect poor populations, releases the following statement:
"The Paris raids are another example of a global epidemic.
"Every year, across the world billions of dollars are lost in taxes because of elaborate evasion schemes. When taxes aren't paid, schools aren't built, hospitals close and infrastructure crumbles. Poor people too often lose the most.
"No matter where corporations do business, they need to publicly report what payments they make to every government where they set up shop.
"Along with the concerns that stem from the Panama Papers, these allegations show the need for more transparency in international tax policies."
by Greg Williams
Representative Sean Duffy (R-WI) introduced a new version of legislation to help resolve Puerto Rico's financial crisis. The Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA," HR 5278) gives Puerto Rico tools to restructure its debt and establishes a fiscal oversight board. This latest version of the legislation lengthens the time that Puerto Rico is protected from debt lawsuits while the island is restructuring debt.
Eric LeCompte, executive director of the religious development coalition Jubilee USA, releases the following statement:
"Congress should pass this Puerto Rico debt legislation as soon as possible. There can be no economic growth in Puerto Rico until the debt is restructured. Without a negotiated solution to the crisis, this legislation provides tools that can help get the debt back to payable levels.
The Obama Administration announced actions to combat money laundering, corruption and tax evasion. In April, the "Panama Papers" leak exposed how "anonymous shell corporations" facilitate crime and corruption.
"It's crucial to global development that we stop corruption and tax evasion," noted Eric LeCompte, executive director of the religious development coalition Jubilee USA Network. "Developing countries lose a trillion dollars a year to corruption, crime and tax evasion."
According to a 2012 academic study from Griffith University, the United States is the second-easiest country in the world to set up an anonymous shell company. These types of companies are accused of being vehicles that can facilitate crime and tax evasion. Representatives Carolyn Maloney (D-NY) and Peter King (R-NY) and Senator Sheldon Whitehouse (D-RI) introduced legislation February 3 to address the issue. After the "Panama Papers" leak, which cited more than 200,000 shell companies in its revelations, the number of co-sponsors of the House bill nearly doubled. In announcing its own legislation, the White House noted that anonymous shell company formation in the United States "can only be resolved through Congressional action."