'This Is Going To Decimate People': AOC Blasts 'Vulture Fund's' Demands To Puerto Rico's Power Grid

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During a House Natural Resources Committee hearing on Wednesday, Rep. Alexandria Ocasio-Cortez (D-NY) spoke about Golden Tree Asset Management's demand that Puerto Rico's power grid operator PREPA pay out bonds they sold to Golden Tree.

Transcript

00:00The gentleman's time has expired. At this time, the chair would like to recognize the

00:05gentlewoman from the state of New York, Ms. Ocasio-Cortez, for five minutes. Ms. Ocasio-Cortez,

00:10welcome back to Natural Resources. Thank you so much, Mr. Chairman. It's

00:13nice to, and to the full committee chairman as well. It's wonderful to be back. You know,

00:20we're here today to discuss PROMESA, LA JUNTA, and the Federal Oversight Management Board,

00:26which for years has imposed devastating budget cuts to health care, pensions, and education in Puerto Rico.

00:33But, you know, one of the things that we're seeing here and that we're hearing on both sides of the aisle

00:39is the idea of winding down PROMESA's operations, ending PROMESA. There's a right way to do this

00:46that does right by people, and there's a wrong way to do this that devastates working people.

00:53For years, we talked about winding down and ending PROMESA, and there was resistance to it,

01:00and now all of a sudden we're talking about a change in tune. However, I have some questions. Mr.

01:07Mujica, you are the executive director of FOMB, commonly known to Puerto Ricans as LA JUNTA. Is it

01:16true that over the past 10 years your organization has restructured nearly all of Puerto Rico's debt?

01:24Nearly all, with the exception of PREPA, yes. And with PREPA, that is the only significant

01:30remaining debt. According to your organization, how much debt should PREPA pay to its current bondholders?

01:37What, our plan has it at $2.6 billion. $2.6 billion. And I understand that some of the bondholders

01:47disagree with this number, demanding to be paid $12 billion, correct?

01:52That is correct. And I just want to put out one more, $2.6 billion for all creditors, which includes

01:58some for the bondholders, but yes, they're asking for $12 billion. Thank you. So we are talking about this

02:02differential. The Oversight Management Board independently has determined that that number

02:09is $2.6. The bondholders are asking for $12. Now, Mr. Mujica, I see here that one of the main

02:18Wall Street firms fighting for that $12 billion is Golden Tree Asset Management, correct? Which has

02:23come up throughout this hearing. Yes, that is correct. Now, I seek unanimous consent to enter into the record

02:29filing showing that one year after PREPA's bankruptcy, Golden Tree first announced its

02:36investment in PREPA. Without objection. Now, four and a half years after PREPA went bankrupt,

02:46Golden Tree tripled its investment in PREPA bonds reaching $1 billion. That's after the bankruptcy.

02:54That is the definition of a vulture fund. This is an exploitation, a loophole, an unfair practice.

03:04And now these folks who knew that that debt was not viable, buying in after bankruptcy, are now demanding

03:14to be paid out $12 billion, attempting to wind down PROMESA's operations early so that they can be paid

03:22out at that $12 billion instead of the independently determined and negotiated $2.6 billion. And this is

03:28not a partisan thing. I'm sure Mr. Mujica can testify himself. He and I scrap about things all the time

03:35when it comes to services delivered to the island. And some would even argue that that $2.6 billion

03:42number is too high. But $12 billion is massive. It is one third of Puerto Rico's entire annual budget.

03:53It is 10 times the size of Puerto Rico's university system. Mr. Mujica, if these vulture funds like

04:01Golden Tree get their way, you have calculated that that would lead to a 34% increase in electric rates,

04:09or dramatic cuts to public services like health care or education to people on the island. Is that correct?

04:16The increase in the rates would be over 30% because that is the $0.08 increase that would be required

04:21to fund that. I am asking for my colleagues to really sit with the devastating consequences of what

04:33that means. Puerto Rico, you know, Detroit was brought up earlier. One of the reasons that this restructuring is

04:40different from Detroit, it is because Puerto Rico is a colony of the United States. And Detroit is not. Puerto Rico

04:48has voting does not have a vote. We have representation with the resident commissioner. We do not have a vote in the

04:56House. They do not have votes in the Senate. Every single Puerto Rican elected official in serving in the

05:04United States House of Representatives sitting here right now is telling you that this is going to

05:15decimate people. Kids are not able to go to the doctor as it is. People are hardly able to pay their

05:23electrical bills, which are already some of the highest in the country. They aren't able to keep

05:30their medicines refrigerated. Winding down Promesa's operations early and de facto bringing that to,

05:40it would be the governor then who would have the power to decide how much these vulture funds receive.

05:46Is that correct, Mr. Mujica? The gentlewoman's time has expired.

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