On Sunday, August 28, a coalition of Puerto Rican independence groups and their allies gathered outside a hedge fund’s office building in Midtown Manhattan to protest its predatory lending practices.
Davidson Kempner Capital Management LP has exacerbated Puerto Rico’s worsening quality of life and ensnared the archipelago in a debt trap. The coalition and Malaya New York, a Filipino civil society group focused on affirming the sovereignty of countries whose right to self-determination has been threatened by foreign powers, demonstrated together before marching to the residence of Davidson Kempner chief investment officer Anthony Yoseloff.
Protestors demanded that Yoseloff resign from the New York Public Library Board of Trustees for supporting cuts to public education in Puerto Rico. They also called on the hedge fund to drop its claim to repayment and cease its ongoing push to deepen austerity measures throughout the archipelago.
“Davidson Kempner… requested to commission a report specifically demanding that cuts to public education, to hospitals and to pensions happen so that they can get their [expletive] debt,” New York Boricua Resistance (NYBR) organizer Gabrielle Malespin said outside the Yoseloff residence.
The global institutional investment firm, which is based in New York, has around $38 billion in assets under management (AUM).
Davidson Kempner has been ripping pages from the vulture fund playbook for years, its history checkered with the use of high-yield investment strategies targeting distressed debt.
During fiscal year 2012-2013, Davidson Kempner saw its AUM increase from $1.6 billion to $18.5 billion after it bought numerous securities from debtors desperate for credit.
In the run-up to the 2008 financial crisis, Yoseloff managed the firm’s shorting of subprime mortgages. He ultimately “generated huge fortunes for hedge fund managers such as John Paulson,” Bloomberg reported.
Yoseloff is also a member of an ad hoc group of creditors that owns an estimated 35 percent of Puerto Rico Electric Power Authority (PREPA) bonds.
Davidson Kempner purchased around $300 million of Puerto Rico’s constitutional debt, according to Debtwire. Midtown Acquisitions, an affiliate of Davidson Kempner, entered a credit agreement with the municipality of Bayamón involving four series of general obligation (GO) refunding notes that were structured as “ballooning obligations.”
Midtown Acquisitions lent Bayamón roughly $30 million and demanded full repayment. The deal yielded $900,000 in interest for the Davidson Kempner affiliate on top of what Bayamón already owed.
“Midtown Acquisitions has placed the town of Bayamón in an untenable debt situation that [jeopardizes its] public infrastructure,” Malespin, a native of Bayamón, said. “This isn’t just happening in Bayamón, though. This is happening in other towns throughout Puerto Rico.”
The municipalities of Caguas, Carolina, and Fajardo “all had balloon payments due” on July 1, 2018, “on their municipal GOs with private financial institutions,” Debtwire reported in September 2018—ensuing austerity measures resulted in school and hospital closures across the archipelago.
“By creating a dark desperation and unstable living conditions, they are scattering the diaspora, bleeding out Puerto Rico [and] waiting for our elders to pass on so they can move in [and] take the land that rightfully belongs to the people of Borikén, an NYBR demonstrator said outside the Yoseloff residence.
On January 18, Southern District of New York Judge Taylor Swain codified an amended version of Puerto Rico’s Plan of Adjustment (POA), which involves a $33 billion debt restructuring that only postpones the inevitable.
“By and large, the POA does not make significant cuts to bonds held by ‘vulture’ investors who bought up Puerto Rico’s distressed debt for pennies on the dollar in the hopes of a lucrative payout,” Sarah Molinari, postdoctoral research associate at Florida International University, and Marisol LeBrón, associate professor in feminist studies and critical race and ethnic studies at the University of California, Santa Cruz, wrote in Truthout.
Rather, the POA “provides Puerto Ricans with more uncertainty than resolution, especially since the temporality of debt does not resolve —but rather complicates— the relationship between past, present and future obligations,” they continued.
Against the Vultures
The August 28 march materialized in the midst of NYBR’s Second National Congress, where coalition members celebrated the movement’s successes and assessed its strengths and weaknesses.
Shortly after 10 a.m., protestors formed a picket line outside Davidson Kempner, chanting in both English and Spanish.
About a dozen demonstrators have gathered. Notable police presence including a plain clothes officer standing very close by.
Chants are booming into the atrium by the entrance of the building.
“Your democracy’s hypocrisy, set Puerto Rico free,” they say. pic.twitter.com/7uPufsHzTt
— James Baratta (@jamesjbaratta) August 28, 2022
Two coalition members and Malaya USA National Secretary General Julie Jamora spoke before the crowd.
“We strongly condemn the neoliberal policies that have forced Puerto Rico into predatory lending by La Junta… and predatory bolster hedge funds like Davidson Kempner, and that has opened up [Puerto Rico] to more millionaires, billionaires [and] vulture funds under the supposed guise of rebuilding the economy,” said Julie Jamora, secretary general of Malaya Movement USA, a pro-democracy organization comprised of Filipinos and allies.
“One of our… organizational principles is to demand genuine sovereignty against any foreign power, and we raise that sentiment for our Puerto Rican siblings,” she added.
Afterward, crossing guards affiliated with the coalition and Malaya New York escorted protestors as they marched to the Yoseloff residence, passing Trump Tower along the way.
Upon arriving, protestors denounced “vulture” funds and the corruption among government officials in Puerto Rico. While most sang, others played along with traditional instruments like the tambourine, güiro, and maracas. Malespin and other coalition members spoke in both English and Spanish.
BREAKING: @NYboricuaresis1 and comrades are demonstrating outside the #Yoseloff residence to protest David Kempner Capital Management’s predatory lending practices and their impact on the people of Puerto Rico pic.twitter.com/22ymCeXo2Q
— James Baratta (@jamesjbaratta) August 28, 2022
Once the speeches concluded, coalition members commemorated the life and legacy of Franky Valentín, a Young Lord and pro-independence activist who had recently passed away.
Then the protestors marched to Columbus Circle, Bad Bunny’s “El Apagon” blaring through a megaphone as they walked, where they debriefed and prepared for the final day of their Second National Congress
“We hope that we not only educate the people of Anthony Yoseloff or what Davidson Kemnper does, but to demonstrate that we see the situation on the island and we stand in the same fight against these vultures who wish to kill us softly,” NYBR organizer Jorge Cruz told Latino Rebels. “The island and the diaspora are one.”
James Baratta is a freelance journalist graduating from Ithaca College in May 2022 with a B.A. in journalism. He has written for Common Dreams, Fairness & Accuracy In Reporting, and Truthout, among others. Twitter: @jamesjbaratta
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