The crisis fills the pockets of U.S. politicians and lobbyists

On December 9, 2015, Joel Cintrón Arbasetti reported for CPI that, while Puerto Rico waits for Congress to include Chapter 9 or another fiscal measure in the year-end budget, senators with power over that agenda receive donations from mutual and hedge funds that hold Island debt — about $72 billion of Commonwealth and corporate obligations.

In 1984, PR corporations and municipalities were left out of Chapter 9; in 2014 the federal district court and First Circuit struck down the “Criolla Bankruptcy Law” (Franklin/Oppenheimer); the U.S. Supreme Court then said it would review. Democrats back Pedro Pierluisi’s H.R. 870; the Republican majority opposes it.

Using FEC data (Mar 2014–Oct 2015), CPI found $327,250 in donations to Senate Finance Committee members from firms holding PR bonds (14 Republicans and 10 of 12 Democrats on the committee). On Judiciary, 7 Republicans and 7 Democrats also received funds. Chuck Schumer (NY) — who says he supports Chapter 9 — received $99,150 from hedge/vulture funds (York, Fir Tree, Blue Mountain, Apollo, D.E. Shaw, et al.), bondholder law firms (Quinn Emanuel/COFINA, Davis Polk/GDB, Gibson Dunn/PREPA) and lobbyists for (Podesta, PR government) and against (Venable). MassMutual/Oppenheimer (> $4 billion in PR bonds per Morningstar) donated to Schumer and to Charles Grassley, a Chapter 9 opponent.

A documented FEC donation is not adjudicated bribery. Legislative support or opposition does not fix Congress’s outcome.