Alicia Nascimento testifies on Champerty loophole

Good afternoon and thank you for the opportunity to testify.

I'd like to thank the broader committee and especially to Councilmember Alexa Aviles for introducing these historic resolutions.

My name is Alicia Nascimento.

I am the political director at New York Communities for Change.

In 2006, when Puerto Rico's debt crisis was unraveling, our Puerto Rican members watched their homeland being squeezed by a crisis that had nothing to do with their creation.

Schools and hospitals were closing, people were losing their pensions, and they asked us, what can we do from New York?

At the time, we didn't think we could do much, but it turns out that as the financial capital of the world, there is a lot that we can do, and that is within our power.

Puerto Rico may be nearly 2,000 miles away, but the laws governing its debt can be written right here because about half of the world's sovereign debt is actually governed by New York state law.

Champerty is an old English law that has been in the books in New York since the early 1800s.

It was actually meant to stop people from buying someone else's debt just to sue them.

But in 2004, a loophole was created by a billionaire hedge fund investor named Paul Singer, who, as Gabe himself has described, has pillaged Argentina,

took Argentina on a 15-year litigation battle using our courts to ultimately...

extract about $2 billion while Argentinians themselves were undergoing a severe economic crisis.

This is what happens when Wall Street gets to write the rules.

Vulture funds get richer and ordinary people pay the price.

It's the same things that we've been seeing happening in Puerto Rico.

And that's exactly why we're fighting to close the Champerty loophole and why we're supportive of all the resolutions, but particularly Resolution 27.

We're not saying that investors can't invest.

We understand that.

But we're saying that you shouldn't be able to buy a country's debt for pennies on the dollars, refuse to negotiate, and then use our courts to demand the full amount at the expense of our people.

This is why NYCC and the Debt Justice Alliance alongside our partners, Cuff, Strong Economy for All, Center for Popular Democracy, urged to pass Resolution 27 and to stand with us in Albany.

And I just wanted to close with saying that our court should be a place for justice.

It's not a place where vulture funds can extract as much money as possible from countries and hold them hostage, which is what we've been doing.

So let's get this done.

Thank you all.