Daily Beast - “Texas & Florida are doing great but Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble ... Much of the Island was destroyed, with billions of dollars ... owed to Wall Street and the banks which, sadly, must be dealt with,” Trump tweeted on Monday.
Much of Puerto Rico’s more than $70 billion in debt was generated by bond sales from which Wall Street raked in nearly $2 billion in fees. One bank charged Puerto Rico in excess of 30 percent more than it charged Detroit.
As anyone could have predicted, Puerto Rico had trouble making the debt payments and the bonds were deemed “the junkiest of junk,” or about par with the $675 million in junk bonds Trump once used to finance his casino empire in Atlantic City—despite declaring that he would never reduce himself to such reckless financing.
As Puerto Rico staggered, hedge funds aptly known as “vulture funds” swept in, buying the debt at a discount of as much as 50 percent. They seemed assured of making a killing because the Puerto Rican Constitution is a vulture’s dream. Article 6, Section 8 states:
“In case the available revenues including surplus for any fiscal year are insufficient to meet the appropriations made for that year, interest on the public debt and amortization thereof shall first be paid.”
In other words, the government has to pay whoever held the debt before funding even the most basic services, hospitals and schools included. An added colonial twist in federal law prohibits municipalities and public corporations such as utilities in Puerto Rico—and only Puerto Rico—from declaring bankruptcy.
If such strictures had applied to Trump, he would still be paying off his casino debt. He was instead able to avoid personally incurring significant debt while pocketing millions for himself.
“Atlantic City fueled a lot of growth for me,” Trump told The New York Times last year. “The money I took out of there was incredible.”
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