PROMESA Title III: The Largest Municipal Bankruptcy in U.S. History

Puerto Rico's Title III bankruptcy — the largest municipal debt restructuring in American history — is the culmination of colonial economic policy.

The Numbers:
- Government debt: approximately $72 billion
- Unfunded pension obligations: approximately $49 billion
- Total: approximately $121 billion
- Comparison: Detroit's 2013 bankruptcy was $18 billion — Puerto Rico's was nearly seven times larger

How the Debt Was Created:
1. Section 936 repeal (2006) triggered economic collapse
2. Government borrowed to cover lost revenue
3. Wall Street aggressively marketed Puerto Rican bonds
4. Triple-tax-exempt status made bonds uniquely attractive to mainland investors
5. Capital appreciation bonds deferred interest, increasing long-term costs

Wall Street's Role: Investment banks earned hundreds of millions in underwriting fees marketing Puerto Rican bonds they knew were risky. The triple-tax-exempt status created a market where mainland investors profited from Puerto Rico's colonial tax structure.

Title III Process: PROMESA created a pseudo-bankruptcy framework. Judge Laura Taylor Swain presided. The Plan of Adjustment (2022) restructured approximately $33 billion in central government debt.

Impact on Puerto Ricans: Pension cuts (some losing 8.5%), continued austerity, school closures, hospital closures, government layoffs.

The Colonial Dimension: Puerto Rico couldn't file Chapter 9 bankruptcy (only states control that for their municipalities). The bankruptcy was managed by an unelected board. The creditors who profited from Puerto Rico's colonial bond market were represented; the Puerto Rican people were not.

Title III proved that in the colonial financial system, the colony's people are the last creditors paid — after Wall Street, after the bondholders, after the hedge funds.