Yale and the Collapse of Puerto Rico’s Economy
Hurricanes Irma and Maria have devastated Puerto Rico, leaving 3.7 million American citizens in desperate circumstances. Although individuals and organizations within the Yale community are sending aid to alleviate the suffering, Yale also has a hidden influence on the territory’s future: certain investment managers in charge of growing the university’s $27.2 billion endowment are attempting to extract wealth from Puerto Rico through investments in the island’s debt.
At least five of Yale’s investment managers had holdings in Puerto Rican debt at the end of 2017. Two of those managers, Yale’s fifth and seventh largest, have been part of a small group of creditors who insist not only that Puerto Rico’s $74 billion in public debt be paid in full, but are fighting other so-called “vulture funds” to be paid first. The second largest holder of Puerto Rican debt is Franklin Resources. Billionaire Charles B. Johnson is Franklin’s top shareholder. In September 2013, Johnson donated $250 million to Yale University for the construction of two dormitories, making him the largest donor in Yale’s history.
What is Yale’s Endowment?
What is Puerto Rico’s Debt?
How is Yale Invested in Puerto Rican Debt?
How is Yale’s Top Alumni Donor Invested in Puerto Rican Debt?
The ongoing litigation between groups of investors seeking to be paid first threatens to worsen an already catastrophic situation for Puerto Rico. Recent history shows that litigation among creditors can significantly slow down the process of restructuring debt and economic recovery. One of Yale’s investment managers was party to 15-year lawsuit against the government of Argentina. Creditors, seeking repayment in full, slowed Argentina’s recovery, generating more than $300 million in profit for Yale. Instead of fighting over who gets to squeeze Puerto Rico the hardest, Yale, its largest donor and its investment managers should disclose all Yale holdings in Puerto Rico’s debt, cancel the debt they hold and encourage other institutions to do the same.
Further citations available on request.
To learn more about the current economic crisis in Puerto Rico, visit Puerto Rico Syllabus, a collection of resources co-founded and maintained by Yale: Cancel the Debt signatories Dr. Yarimar Bonilla and Dr. Marisol LeBron.