Ritchie Torres Slams Dissolve Of Puerto Rico Finance Board: It 'Sells Out The People Of Puerto Rico'

Forbes Breaking News

During a House Natural Resources Committee hearing before the Congressional recess, Rep. Ritchie Torres (D-NY) spoke about the abolition of the Puerto Rican Financial Oversight Management Board.

Transcript

00:01At this time, the chair would like to recognize the gentleman from New York, Mr. Torres, for five minutes.

00:06Mr. New York, Mr. Torres.

00:10I just gave you a new title there, Congressman.

00:14That's the kindest thing anyone has ever said about me. I appreciate that. Thank you.

00:19And I want to associate myself entirely with the comments from both of my colleagues from New York.

00:23It seems to me there's a concerted campaign to prematurely abolish the Financial Oversight Management Board

00:30in order to set the stage for a backroom deal that sells out the people of Puerto Rico

00:35to the interest of the most predatory bondholders.

00:39I'm a critic of the board, but the board may be the one institution that's protecting the people of Puerto Rico

00:45from a highway robbery of the island's electric grid.

00:49And so I have two messages for my congressional colleagues.

00:52First, Congress should not prematurely abolish the board

00:56until a fair debt restructuring is complete.

01:00And second, Congress should not pressure the board

01:02to finalize a debt restructuring that jeopardizes grid reliability and energy affordability.

01:09The protection of ratepayers and the grid itself

01:12must be the non-negotiable principle that governs any debt restructuring.

01:17Both the board and Congress have an obligation

01:20to prioritize the existential energy needs of Puerto Rico

01:24above the narrow interest of a few bondholders.

01:28Every dollar spent on lining the pockets of predatory bondholders

01:33is a dollar not spent on maintaining and modernizing

01:36Puerto Rico's electric grid.

01:38And so, Mr. Mojica, my question is which bondholder

01:42has emerged as the single greatest stumbling block

01:44to a restructuring that is fair to the people of Puerto Rico?

01:50There is a group of non-consenting bondholders.

01:53Who's the worst among them?

01:54The lead of the group, Golden Tree, I believe, is leading...

01:57Okay.

01:57How much is Golden Tree demanding?

01:59Excuse me?

02:00How much is Golden Tree demanding?

02:01How much do they demand?

02:02The non-consenting bondholders as a group are demanding

02:068.5 billion pre- and post-petition interest, so 12 billion.

02:09And is it fair to say that the bondholders led by Golden Tree

02:12is demanding a recovery that is five times larger

02:16than the recovery accepted by the consenting bondholders,

02:20including BlackRock?

02:21Is that accurate?

02:23That's correct.

02:24Now, Puerto Rico's grid is failing catastrophically.

02:27It needs every dollar it can possibly get.

02:30There are no net revenues.

02:33The notion of robbing a failing grid

02:35of desperately needed dollars

02:37in order to placate essentially one implacable bondholder

02:40would represent the most profound betrayal

02:43of the people of Puerto Rico that one could imagine.

02:47And if Puerto Rico were a state,

02:49it would be the lowest income state in the country.

02:51And so the tragic story of Puerto Rico

02:53is one in which the lowest income rate payers

02:56are paying among the highest electricity bills

02:59for the worst-performing electric grid in the continent,

03:03resulting in a perfect storm of energy poverty.

03:07The rate payers of Puerto Rico pay 26 cents per kilowatt hour

03:12compared to a national average of 17,

03:15which is to say Puerto Rico pays 53% more

03:18than the rest of the country

03:20for an electric grid that is failing them catastrophically.

03:23And so a $12 billion recovery

03:26would be golden for GoldenTree,

03:28but it would not be so golden for the people of Puerto Rico.

03:32And if the board or the government of Puerto Rico

03:34were to give in to the extortionate demands of GoldenTree,

03:37how much more would the people of Puerto Rico pay

03:39in electricity rates?

03:42They would pay an additional 8 cents

03:44to fund the $12 billion.

03:45And that would include,

03:47and in addition,

03:48there would be 2.5 cents

03:50to cover underfunded pensions, right?

03:52That's correct.

03:53So it's a total increase of 10.5 cents,

03:5636 cents per kilowatt hour.

03:58At 26 cents,

04:00Puerto Rico has the fifth highest electricity rates

04:02in the country compared to states.

04:05But at 36 cents,

04:07it would have the highest electricity rates

04:08in the country, second only to Hawaii.

04:10Is that accurate?

04:11Yes.

04:12For me, this hearing is as important

04:16as any hearing we could hold

04:17in the United States Congress.

04:19Like the stakes for Puerto Rico are existential.

04:22What is at stake is nothing less

04:24than the survival of the island itself.

04:26There may be nothing more foundational

04:28to an economy or a society

04:30than affordable and reliable electricity.

04:34And Puerto Rico,

04:35for all its resilience,

04:37cannot long survive the absence

04:39of reliably functioning electric grid.

04:42And so any deal

04:44that existentially threatens

04:45the reliability and affordability

04:47of Puerto Rico's electricity

04:49should be seen as a non-starter

04:51that is rejected emphatically.

04:53That should be the universal position

04:55of every member of Congress.

04:56And I'll leave you with the last word.

04:58Thank you, Congressman.

04:59And I just want to point out,

05:00the board is not in a position,

05:02we don't pick winners and losers.

05:04We are blind to who is holding the debt.

05:06We are looking at

05:07what is in the best interest

05:09of the people of Puerto Rico.

05:10Is it viable for PREPA?

05:12And that is where we determined

05:13the $2.6 billion.

05:15And as you pointed out,

05:16there are major creditors

05:17and bondholders

05:18who have accepted that deal

05:19recognizing the...

05:22If Black Rocket accept it,

05:23so can Golden Tree.

05:24so...

05:25So...

05:26Okay.

05:26So...

05:27you

05:27here.

05:27So...

05:28So...

05:28you

05:33so...

05:35you

05:36so...

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