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Financial Control Board for Puerto Rico Would Create ‘Government Of, By, and For the Hedge Funds’

Feb. 24, 2016 (EIRNS)—Were a financial control board of the kind imposed on New York City in the 1970s and Washington, D.C., in the 1990s, be imposed on Puerto Rico, it would create a new government "of the hedge funds, by the hedge funds, and for the hedge funds," that would "destroy the Commonwealth’s ability to provide essential services to its people." So warned Puerto Rican Senator Ramon Luis Nieves, of the governing PPD party, in an article published in The Hill today.

Nieves also faulted the Obama administration for offering only "technical assistance" and paying "lip service," rather than providing real solutions to a dire crisis.

The argument that a control board is required when governments are unable to make painful policy decisions, doesn’t hold water in Puerto Rico’s case, Nieves states. The Garcia Padilla administration has made many painful and politically-costly decisions, imposing austerity, reforming the pension system, etc., in order to pay debt. The bottom line, Nieves asserts, is that "hedge funds and institutional bondholders want to get paid in full." Given big upcoming debt-service payments, a control board "could bypass our local Constitution in order to pay bondholders, while slashing government spending on essential services."

In remarks published in El Nuevo Día Feb. 23, Gov. Garcia Padilla affirmed that he would not accept the imposition of any control board that eclipsed the rights of local elected officials to approve the budget or other fiscal measures. He repeated what he had written to House Speaker Paul Ryan (R-Wis.) earlier this week, that the only solution to the debt crisis is the establishment of a broad legal framework for restructuring all of Puerto Rico’s debt. He told El Nuevo Día that he’s willing to introduce emergency legislation to declare a debt moratorium, should it be deemed necessary.

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