Dem blames ‘loan sharks’ for Puerto Rico’s debt crisis

“Puerto Rico has come into debt with loan sharks, the kind who ply their trade on Wall Street,” he wrote in an open letter to Obama.

“Now the sharks are circling, demanding payment even if that means taking police off the streets, teachers out of schools, and nurses from hospitals,” Gutierrez added. “They want repayment of $73 billion in bonds – and that is just the tip of the iceberg when it comes to the totality of Puerto Rico’s debt situation.”

“And the billionaires on Wall Street want payment on their terms so that they can pad their investment portfolios,” he added. “As the president, I suggest to you that it is long past time when action and intervention is needed.”

According to the Wall Street Journal and other accounts of the debt crisis, the end of corporate tax breaks in 2006 drove companies off the island, and Puerto Rico started borrowing money and building a relatively huge debt for a territory its size. Congress helped by letting Puerto Rico issue tax-exempt bonds.

Puerto Rico ran up its debt by selling these bonds, many of which made their way into the hands of ordinary Americans. But at the same time, the island’s economy never improved, and defaults on those bonds are expected as a result.

Puerto Rico has been pressing the U.S. government to take some step to resolve the problem, but so far, Congress has given no indications that it’s inclined to do anything.

Gutierrez didn’t explicitly say Obama should orchestrate a plan to forgive a portion of Puerto Rico’s debt, and said Puerto Rico doesn’t need a “bailout.” But he did say Obama should find some solution that work “on behalf of the greater good.”

“They need a mutually agreed-upon plan to move forward towards self-sufficiency charted in good faith,” he said. “I know they are willing to come to the table earnestly to work with honest brokers to resolve their debt crisis.”