WASHINGTON — The 60 Plus Association announced on Thursday that it is forming a coalition of small holders of Puerto Rico bonds that will push for the creation of a financial control board before any consideration of bankruptcy legislation for the territory.
In a release issued by the Alexandria, Va.-based nonprofit group, Matthew Kandrach, vice president, accused Puerto Rico officials of "manufactur[ing] a crisis" to get "Washington help in their plan to stiff creditors," adding, "Congress must not allow that to happen." The territory would benefit most from a financial control board similar to the one set up for the District of Columbia in the 1990s, he said.
During a conference call with reporters, Dr. Elias Gutierrez, an economics professor at the Graduate School of Planning at the University of Puerto Rico, said he had invested his life savings in the territory's bonds and wants bondholders' rights protected. "The Commonwealth must honor its debts, especially its constitutional debt," he told reporters.
Gutierrez said many Puerto Rico residents do not fully understand the situation and "are still confused."
"I ask you to join me," in the coalition, he said.
Kandrach said the group is similar to one the association developed for holders of General Motors debt when that company was struggling financially.
The coalition is still in the organizational phase, he said. Its initial goal will be to educate the public and members of Congress about Puerto Rico's financial struggles, the many investors that hold its debt, the many individuals indirectly affected by its debt, such as retirees whose pensions invested in the bonds, and how that debt could be affected by bankruptcy legislation.
There are no plans, at present, for the group to take legal action, such as with regard to the Puerto Rico Public Finance Corp.'s default on more than $57 million of debt service that was due for some 2011 bonds on Aug. 3, he said.
Gerry Scimeca, director of media relations for the group, said after the conference call that the coalition "is ongoing, kind of organic and growing" and that it plans to heavily lobby members of Congress when they return from their summer recess.
After the call, Kandrach said in an email that the coalition is not opposed to the Puerto bankruptcy bills pending in Congress. The group just wants a financial control board established before any consideration of bankruptcy, he said.
But the 60 Plus Association took out a full-page advertisement in Politico in April stating that calls Chapter 9 a "bad deal for seniors" and a "bad deal for U.S. taxpayers." The advertisement said that extending Chapter 9 for Puerto Rico would "unfairly change the rules in the middle of the game for millions of senior citizens and other pensioners and investors who have their life savings on the line."
Bills that would provide Puerto Rico utilities and other authorities with bankruptcy protection, similar to U.S. states, are pending before the both the House and Senate Judiciary Committees. The House bill is sponsored by Puerto Rico's non-voting member of Congress, Pedro Pierluisi. The Senate measure was introduced by Sens. Chuck Schumer, D-N.Y., and Richard Blumenthal, D-Conn. Republicans on those committees have said they not support the bills, at least for now.
The 60 Plus Association has ties to the Koch brothers, according to the Center for Responsive Politics. The group's latest Form 990 on its financials, which was filed with the Internal Revenue Service for its fiscal year ending June 30, 2013, shows the group had revenues of $18.98 million, most of which was from contributions and grants. It had expenses of $18.28 million, of which $13.61 million of which was used for media, direct mail, postage and printing, Its net assets totaled $919,243.
