Sanders pins Puerto Rico debt woes on Wall Street

Sen. Bernie Sanders (I-Vt.) joined calls to allow Puerto Rico to declare bankruptcy while blaming Wall Street and austerity policies for the island’s grim fiscal picture.

The Democratic presidential candidate said Tuesday that Congress should change the law so that Puerto Rico can allow its entities to declare bankruptcy, just as states can do for municipalities.

{mosads}Sanders said that giving Puerto Rico access to Chapter 9 bankruptcy, which details the bankruptcy process for public entities, would be a “good first step.” The island commonwealth is grappling with roughly $73 billion in outstanding debt, far beyond that of any other state in the United States.

But Sanders said Puerto Rico is in a situation where it cannot pay all its debts due to “the policies of austerity and the greed of large financial institutions.”

“Our goal must be not only to give Puerto Rico the flexibility it needs to restructure its debt, but to make sure that it can rebuild its economy, create good-paying jobs and expand its tax base,” he said in a statement.

Puerto Rico’s governor has declared the territory will not be able to pay back all of its debts and is pushing for bankruptcy for some of its entities.

The idea appears to be gaining traction among policymakers, as a number of high-profile politicians have embraced the idea.

Sanders’s comment came hours after fellow Democratic presidential candidate Hillary Clinton similarly said Puerto Rico should have access to Chapter 9 bankruptcy, which details the bankruptcy process for public entities. Former Maryland Gov. Martin O’Malley, who is also running for the Democratic nomination, and former Florida Gov. Jeb Bush, the GOP presidential front-runner, have also supported the bankruptcy proposal.

However, the idea has generated some opposition from the financial sector, most acutely from investors who stand to face losses on Puerto Rican debt if the territory is allowed to pursue bankruptcy.