Senate Dems Announce Bills to Aid Puerto Rico, But Fail to Mention Glass-Steagall
March 16, 2016 (EIRNS)—On March 14, Sen. Bob Menendez (D-N.J.) introduced two pieces of legislation—the Puerto Rico Stability Act (S.2676) and the Puerto Rico Recovery Act (S. 2675)—intended to provide Puerto Rico with the means to get out of its catastrophic debt crisis.
The bills, Menendez explained, would allow the island to restructure the entirety of its $72 bn. in debt and stabilize its fiscal situation. Otherwise, he warned, "Puerto Rico is on the brink of default and staring into the abyss." He decried the brutal austerity measures the island government has been forced to impose, which have devastated public services, schools and healthcare. He particularly stressed that he wanted to prioritize refunding Puerto Rico’s pension system, over payments to bondholders.
Shortly after Menendez’s announcement, Sen. Kirsten Gillibrand (D-N.Y.) and Chuck Schumer (D-N.Y.) introduced separate legislation for the same purpose. It would allow the island to file for bankruptcy protection and restructure its debt. The two Senators were accompanied by Sen. Elizabeth Warren (D-Mass.), who warned that if Congress doesn’t act, "Wall Street creditors will pick apart what is left of the economy."
Glaringly absent was any mention of the urgent need for Glass-Steagall legislation, which would address the fact that a significant portion of the island’s debt is speculative, owned by vulture funds or built up by years of predatory lending.
The Democratic Senators are also insistent that Puerto Rico needs federal oversight. While stressing that he would respect Puerto Rico’s autonomy, Menendez emphasized that before Puerto Rico would be given the authority to restructure its debt, it must accept the establishment of an independent Fiscal Stability and Reform Board and a Chief Financial Officer. The Board would have the power to review annual budgets, future debt issuances, and "exercise strong oversight and transparency power," Menendez underscored.