When Puerto Rico declared a form of bankruptcy in May, it was the largest municipal bankruptcy debt in U.S. history. Puerto Rico’s more than $74.8 billion in debt and $49 billion in pension system obligations surpasses Detroit, Mich.’s $18 billion bankruptcy in 2013. Much of that debt is interest. According to a report by the ReFund America Project, the financial firms like Goldman Sachs and Citigroup that helped structure the bonds built in astronomically high interest rates. Nearly half the debt—$33.5 billion—is interest, and another $1.6 billion comes from fees paid to these firms.
To scrounge up that money, Puerto Rico has been struggling through austerity measures approved last spring by a U.S.-appointed fiscal control board, including school closures and utility bill hikes. In August the control board proposed even more draconian measures, such as massive furloughs.
The financial firms have organized themselves into alliances to aid their quest to get paid. These alliances include the Mutual Fund Group, which claims $7.1 billion in Puerto Rico’s debt; the Ad Hoc Group, which claims $3.3 billion; the Cofina Senior Bondholders Coalition, which claims $3.1 billion; ERS Secured Creditors, which claims roughly $1.4 billion; and the QTCB Noteholder Group, which claims more than $600 million.