Sanders calls on Fed to bail out Puerto Rico

Sanders calls on Fed to bail out Puerto Rico
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Bernie SandersBernie SandersGun control: Campaigning vs. legislating Booker defends middle-ground health care approach: 'We're going to fight to get there' Sunday shows preview: Democratic candidates make the rounds after debate MORE wants the Federal Reserve to extend an emergency line of credit to Puerto Rico.

The Democratic presidential candidate rallied supporters on the island territory Monday and said the government cannot wait any longer to step in and address its economic and debt crisis.

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“If the Federal Reserve could bail out Wall Street, it can help the 3.5 million American citizens in Puerto Rico improve its economy and lift its children out of poverty,” the Vermont senator said.

Sanders’s plea for action from the Fed comes as lawmakers continue to struggle to advance legislation that would help the island work its way out from under more than $70 billion in debt. Years of economic decline have left Puerto Rico without enough money to pay back all it owes, and it currently lacks the legal power to seek bankruptcy.

Legislation to allow some bankruptcy powers, while establishing an outside fiscal review board for the island, is being worked on in the House, but action has slipped for weeks as stakeholders jockey for position on the measure.

The Fed has shown little interest in diving into Puerto Rico’s finances. But Sanders said it has the power to do so, using the same powers the central bank cited when it stepped in to help AIG and Bear Stearns during the 2008 financial crisis.

Sanders also announced his opposition to a central plank of the House bill: the outside fiscal control board. Republicans have insisted that external review of the island’s finances is a critical piece of any bill, as years of fiscal mismanagement by Puerto Rican officials contributed to the crisis.

Democrats have expressed concern that the board not be so powerful as to effectively replace the island’s elected officials but generally have expressed a willingness to back the idea.

But Sanders took a much tougher stance Monday, calling it a “Republican plan … that would be a move in exactly the wrong direction. It must be rejected.”

And Sanders also heaped scorn on hedge funds that have bought up Puerto Rican debt and are now pushing hard in Washington to see as much of that investment paid back as possible. He called the tactic “morally repugnant” and argued that Wall Street investors should certainly not be the first in line for the shrinking pile of Puerto Rico revenues.

“They have got to take a massive haircut,” said Sanders. “The people in Puerto Rico should not be forced to suffer even more so that a handful of wealthy investors can make even more money.”

Puerto Rico holds its Democratic presidential primary on June 5.