The Jubilee Blog

A Window of Opportunity for Puerto Rico

By Natalia Kolbjornsen

In an auditorium full of diverse individuals discussing Puerto Rico’s financial crisis, Miguel Soto Class expressed his enthusiasm that “this event shows how involved other people are, and we can’t imagine that it is all for nothing.” On February 15^th, the University of the District of Columbia (UDC) Latino/a Law Students Association held a panel discussion on Puerto Rico’s current economic crisis. Miguel Soto Class, the Executive Director and founder of the Center for a New Economy (CNE) and UDC law student Margarita Valera began the discussion about the root of the crisis. According to Mr. Soto, for the past ten years Puerto Rico has had a contracting economy that caused residents to migrate to neighboring states. The government has borrowed to finance a structural deficit.

In 2016, Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) which put in place an oversight board to restructure the debt. Mr. Soto stressed that apart from restructuring the debt, Puerto Rico is in dire need of stimulating its economy. CNE, a privately financed non-governmental think tank, encouraged the federal government to create a Puerto Rico growth commission last summer. Since the federal government didn’t create the commission, CNE decided to make their own. They are assembling a team of economists to find solutions to Puerto Rico’s crisis. The commission will meet in April and will analyze Puerto Rico's economic condition and brainstorm ways for the island to grow sustainably. They hope to establish a long-term approach that will include a "country dialogue" consisting of the government, NGOs, and unions, as well as economists.

Puerto Rico is in a fragile state: the health care system is in crisis due to hospitals closing and professionals migrating out of the country. Mr. Soto believes that the situation in Puerto Rico is at “a slow boil” and affecting everyone on the island. The crisis has caused many families to lose their homes and their jobs, and forced many to flee the island. Mr. Soto expressed his concerns but said that he hasn’t lost his enthusiasm and that Puerto Rico will find a window of opportunity through decisive action.

Since 2015, Jubilee USA has been working with Puerto Rico’s religious leaders, government, creditors and with Congress, Treasury and the White House to find solutions to the crisis. Eric LeCompte, Jubilee USA’s executive director, addressed the Financial Oversight and Management Board for Puerto Rico in November to propose ways to restructure the debt and end the crisis. In a February call to action, Jubilee urged Congress to enact bipartisan recommendations to relieve Puerto Rico’s economic crisis. These recommendations include giving Puerto Rico equal treatment to the US mainland with Medicaid and Medicare funding and extending the federal child tax credit to Puerto Rico to reduce the crushing child poverty rate on the island.

Congress must recognize the severity of Puerto Rico’s economic crisis and work collaboratively towards economic sustainability and stability on the island. CNE’s initiative to create a growth commission plays an important role in analyzing Puerto Rico’s economic crisis as well as providing sustainable solutions. Jubilee USA will continue working with faith leaders on the island to advocate for the reforms needed to alleviate the crisis and improve the lives of the 3.5 million American citizens who live in Puerto Rico.

Treasury Extends Anti-Money Laundering Luxury Real Estate Regulations

By Greg Williams

Treasury's Financial Crimes Enforcement Network (FinCEN) renewed requirements for title insurance companies to identify the real owners behind shell companies in six major metropolitan areas. These “Geographic Targeting Orders” started in 2016 and preliminary reporting found that 30% of buyers were involved in suspicious activity. Watchdog groups like Jubilee USA are concerned that real estate purchases in places like New York and Miami are ways for corrupt officials to launder money.

“It's good news that Treasury is renewing these reporting requirements. Luxury real estate transactions can be used to launder money stolen from developing economies,” explained Eric LeCompte, Executive Director of the religious development organization Jubilee USA. "Not only can unchecked real estate purchases support corruption and tax evasion, they also drive up real estate values that leave little room for affordable housing.”

FinCEN's order applies to New York City, Los Angeles, San Diego and the Miami, San Francisco and San Antonio metropolitan areas. According to a recent report from the research organization Global Financial Integrity, developing countries lose more to corruption and tax evasion than they receive in loans, aid and other sources combined. Last year's "Panama Papers" leak revealed how shell companies can facilitate corruption and tax evasion.

“Improving global transparency is essential to solving global poverty,” stated LeCompte who serves on United Nations expert groups that focus on the financial system.

Read more about FinCEN renewal of the “Geographic Targeting Orders”

Read more about the Panama Papers and anonymous shell companies‎

Congress Moves Slowly on Bipartisan Puerto Rico Recommendations

By Greg Williams

Congress has not acted on recommendations made by its Puerto Rico task force it implemented last year. The Congressional Task Force on Economic Growth in Puerto Rico was established by Congress last summer as a part of its "PROMESA" debt crisis legislation. The task force released its final report on December 21st.

"Unfortunately, we lost some momentum on action for Puerto Rico. Congress does still have a role to play in resolving the island's crisis," stated Eric LeCompte, Executive Director of the religious development organization Jubilee USA. In recent weeks, Jubilee USA visited more than 40 Congressional offices about legislative action to pass the recommendations. "In order to restructure Puerto Rico's debt and avoid some types of austerity, Congress needs to pass the bipartisan recommendations."

The task force gave extensive directives, including asking Congress to extend the Child Tax Credit to additional families in Puerto Rico, which could inject nearly $3 billion into the economy over the next decade. Currently on the island, only families with three or more children are able to claim the credit. It also called for Congress to give Puerto Rico equal treatment to the US mainland on Medicaid and Medicare funding.

"The task force's report is a blueprint for practical action for Puerto Rico," noted LeCompte. LeCompte's organization won an amendment to the PROMESA legislation that required the task force to address Puerto Rico's high child poverty rate. "Everyone has a role to play in resolving this terrible crisis and we need Congress to play its role as soon as possible."

The task force included Senator Orrin Hatch (R-Utah), Senator Marco Rubio (R-Florida), Representative Sean Duffy (R-Wisconsin), Representative Tom MacArthur (R-New Jersey), Senator Bill Nelson (D-Florida), Senator Robert Menendez (D-New Jersey), Representative Pedro Pierluisi (D-Puerto Rico) and Representative Nydia Velázquez (D-New York).

Read more about Puerto Rico's debt crisis

See Jubilee USA's action alert to Congress

Read the task force's report

Trump Voids Dodd-Frank 1504 Transparency Rule

By Greg Williams

President Trump signed into law Congressional action to void requirements that the oil, gas and mining industries report financial activity in countries where they operate. The bipartisan 1504 "Cardin-Lugar amendment" to the 2010 Dodd-Frank Wall Street Reform Act instructed the Securities and Exchange Commission to create this disclosure rule.

"In the short term, we lost a tool that can help track the billions of dollars lost to corruption and tax evasion in the developing world,” noted Eric LeCompte, Executive Director of Jubilee USA, a religious development organization. “Resource rich countries are particularly vulnerable to the kind of corruption that the Cardin-Lugar amendment threatened to expose.” 

The House of Representatives and Senate passed this resolution in a quick series of votes in early February under the Congressional Review Act. The Securities and Exchange Commission, which initially wrote the rule, now has a legislative mandate to write a new rule. According to the Congressional resolution, the new rule cannot be 'substantially similar' to the old one.

"Now we need to be sure that the new rule that the Securities and Exchange Commission writes will be a rule that can still stop corruption,” commented LeCompte, who serves on United Nation expert groups that focus on finance. ‎"Improving financial transparency and ending global poverty are two sides of the same coin.”

Read more about the Cardin-Lugar amendment

Read the oped published on 1504 from Eric LeCompte, Jubilee USA's executive director

Read the letter Jubilee USA's executive director sent to Congress on the legislation 

"Know Before You Owe" Under Attack

By Annie Fort

In October 2016, the Consumer Financial Protection Bureau (CFPB) outlined increased transparency measures for prepaid spending cards. The CFPB’s rule, nicknamed “Know Before You Owe,” stresses the importance of promoting clear and accessible customer information.

On February 1, 2017, Senator David Perdue introduced legislation (S.J. Res 19) to nullify the CFPB’s new prepaid card rule and limit the organization’s authority. Since introduction, S.J.Res 19 has moved to the Senate Banking, Housing, and Urban Affairs Committee for review.

With the “Know Before You Owe” rule, consumers would have access to information about their account and charges. Rules and regulations would be provided prior to purchase of the card. Consumers would also be provided with a publicly available card agreement after the purchase is complete. Additionally, the rule offers consumers protection against overdraft fees.

Under the rule, prepaid companies must ensure that the owner of the prepaid card has the ability to repay any debt acquired on the card. The company must also offer ample and reasonable time to pay back late fees and limit any interest charges accumulated on the card.

The CFPB issued the “Know Before You Owe” rule in October, 2016 with the intent that the rule would be enforced starting October, 2017 to ensure prepaid companies would have ample time to adjust their policies.

According to Lauren Saunders of the National Consumer Law Center, “Consumers turn to prepaid cards to protect themselves from overdraft fees, and prepaid cards should be just that: ‘prepaid.’” By limiting overdraft fees and increasing transparency, the CFPB prepaid card regulations are designed to ensure that prepaid cards are used for their intended purpose.

 

Jubilee USA supports policies that promote financial transparency and protect consumers and communities from predatory finance. To learn more about our work, visit www.jubileeusa.org.

US Senate Overturns Dodd-Frank Transparency Measure

The US Senate voided a rule requiring greater financial transparency in the oil, gas and mining industries by a vote of 52-47. The "Cardin-Lugar amendment," Section 1504 of the 2010 Dodd-Frank Wall Street Reform Act, requires companies in these industries to disclose payments to governments in the countries where they operate. The resolution voiding the rule has already passed the House. Now the resolution goes to President Trump, who is expected to sign it.

Eric LeCompte, Executive Director of the religious development organization Jubilee USA, releases the following statement:

"We are worried how this action will impact poor and vulnerable communities.

"Congress acted hastily and didn't take the time to understand how this action affects transparency and accountability.

“Now a new rule needs to be developed and we need to be sure it really furthers anti-corruption efforts.”

Read more about the Cardin-Lugar amendment

Read the oped published on 1504 from Eric LeCompte, Jubilee USA executive director

Read the letter Jubilee USA's executive director sent to Congress on the legislation 

House Repeals Dodd-Frank Transparency Provision; Senate Prepares to Vote by Friday

By Greg Williams

The US House of Representatives repealed a bipartisan transparency initiative that affects the oil, gas and mining sector by a vote of 235-187. The "Cardin-Lugar amendment" of the 2010 Dodd-Frank Wall Street Reform Act requires oil and mining companies to disclose financial activity and payments to governments in the countries where they operate. Transparency advocates hope the Senate will stop any repeal.

"I'm saddened by the House vote," stated Eric LeCompte, executive director of the religious development coalition Jubilee USA. "I think the House acted too hastily and many Representatives don't understand how this action hurts poor people.‎"

The Senate could vote on companion legislation (Senate Joint Resolution 9) as early as February 2. 

Developing countries lose more than one trillion dollars annually to corruption and tax evasion. These so-called "illicit financial flows" contribute significantly to poverty by diverting resources from basic social services. According to research from the organization Global Financial Integrity, a number of the countries with the highest levels of illicit financial flows possess significant quantities of natural resources, including Nigeria, Venezuela and Brazil.

"In a post-financial crisis world we should be increasing transparency, not diminishing it," stated LeCompte, who contributed to creating Section 1504. "We believe the Senate can make the right decision to take us forward, but the vote will be close."

Read more about the Cardin-Lugar amendment

Read the oped published on 1504 from Eric LeCompte, Jubilee USA executive director

Read the letter Jubilee USA's executive director sent to Congress on the legislation