Sanders calls on Fed to bail out Puerto Rico

While visiting Puerto Rico, Vermont Senator and Democratic presidential candidate Bernie Sanders outright called for a bailout of Puerto Rico by the Federal Reserve Bank.

“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.

Now to be clear, this would actually be a bailout, unlike the HR 4900 bill which merely allows a debt restructuring process. On that note, Sanders also came out in opposition to one of the bill’s main proposals, the oversight board. In doing so, he is the only US federal official to do so. That said, don’t expect any of this to have any impact whatsoever.