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Will Cuomo promote debt forgiveness for Puerto Rico?

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Will Cuomo promote debt forgiveness for Puerto Rico?

After Hurricane Maria, Governor Andrew Cuomo visited Puerto Rico long before President Donald Trump, a move seen as a possible boon to his national profile.

“To our colleagues in federal government,” Gov. Cuomo said on Sept. 24, having already returned from the island, “I humbly suggest that at this time, instead of arguing with football players, instead of obsessing how to take health care from the poor in this country, why don’t we put the politics aside and focus on helping Americans?”

As the federal response seemed to flounder, Gov. Cuomo set up supply drop-off sites and spearheaded a fundraising drive, enlisting the Partnership for New York City to create a relief and rebuilding fund at New York Community Trust. On Twitter, the governor has cataloged what the state has already sent or will send the island—72 Port Authority personnel; 53 State Police troopers; 10 “power grid experts”; nearly 250 National Guard personnel; 50 commercially licensed drivers; 25,000 bottles of water; 4,000 canned goods; 17,000 packages of baby wipes; 4,000 packages of diapers; and 10 generators.

Reached Thursday, a spokesperson for New York Community Trust did not share fundraising figures, saying the fund was “in very early days” and that collection was ongoing. While we have no reason to suspect the final tally won’t be impressive—businesses have been asked to donate, at minimum, $10,000—we would be surprised if the haul eclipses $72 billion, the approximate size of the American territory’s pre-Maria debt.

The Intercept has chronicled the island’s debtholders’ immediate response to the disaster, which essentially amounted to offering more debt. From the website’s Sept. 27 article:

The Prepa [Puerto Rico Electric Power Authority] Bondholder Group has offered the island’s utility a $1 billion debtor-in-possession (DIP) loan, and a separate swap of $1 billion in existing bonds for another $850 million DIP note. This money would be immediately available for restoring electric power. In all, the deal includes $150 million in debt cancellation on roughly $9 billion in outstanding Prepa bonds.

The island’s fiscal control board rejected the proposal.

Of 51 “known creditors”—a list compiled from an array of reports—only four have publicly acknowledged donating to relief efforts, according to The Intercept’s Sept. 28 article. Three banks have contributed a total of $1.25 million to relief organizations, and the David Tepper Charitable Foundation and Appaloosa LP, Tepper’s hedge fund, have pledged $3 million to a food bank charity.

Over the past decade, members of the Prepa Bondholder Group have contributed to Gov. Cuomo’s election campaigns. Andrew Feldstein, CEO of BlueMountain Capital, has given $31,000. Principals of Fortress Investment Group have given $60,000. Mark Gallogly of Centerbridge Partners has given $10,000 (and his wife—according to Hedge Clippers, a labor union-backed advocacy group—has given tens of thousands more).

A Cuomo spokesperson did not respond to a question about whether the governor would push for debt forgiveness for Puerto Rico. His office has long maintained that donations do not impact official actions.

Centerbridge Partners—along with Goldman Sachs and OppenheimerFunds, which The Intercept also identified as creditors—is listed as a member of the Partnership for New York City, the business group Cuomo enlisted to help create the Puerto Rico relief fund. The Partnership’s press office did not respond to an inquiry as to whether debt relief would play any role in the charity campaign.

In an interview, Bronx Sen. Gustavo Rivera, who grew up in Puerto Rico, praised Gov. Cuomo for visiting the island so quickly and stressed the need, moving forward, to ensure that any aid package assembled by Congress “takes the long view and deals with infrastructure problems.”

“We need to make sure the people of Puerto Rico have a say in the rebuilding,” Sen. Rivera told The Alt. “Rebuilding needs to be done by people who are there—not vultures who come in and make money. We need to avoid disaster capitalism.”

On Sept. 30, a group of more than 200 Puerto Rican intellectuals, including scholars at CUNY and SUNY, released a statement that demanded, among other things, the repeal of PROMESA—or the Puerto Rico Oversight, Management, and Economic Stability Act—a federal law signed by President Obama last year that created the territory’s fiscal control board.  

“The state of precariousness in which the entire population of the island finds itself forces individuals to concentrate all of their strength on survival,” the statement read, in part. “This state of emergency could be used to promote new measures of austerity that will not benefit Puerto Rico, a country already devastated by the financial disaster of an unpayable debt.”

David Howard King contributed reporting to this article. Photo credit: Governor’s Flickr account.

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