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Indybay FeatureRelated Categories: International | U.S. | Global Justice and Anti-Capitalism
Jubilee USA Files to Supreme Court in Landmark Debt Case
75 Religious and Development Institutions Join SCOTUS Brief to Ensure Global Poor are Heard
Jubilee USA Network and 75 other religious and development groups are filing an amicus or a friend-of-the-court brief with the US Supreme Court in the famed case between Argentina and NML Capital. The case is destined to impact people living in extreme poverty in every corner of the world. The full list of the 75 groups and the actual filing will be available on Jubilee USA´s website on Monday once the case is officially filed.
Kent Spriggs, the attorney representing Jubilee USA and 75 other US groups in the filing said that the issue urged upon the Court raises the question: "Do we believe in a financial system that protects the poor and is accountable to all, or do we believe it’s ok to allow extreme actors to take advantage of the most vulnerable."
The Financial Times has called the case the "debt trial of the century." Argentina has asked the US Supreme Court to consider overturning a US 2nd Circuit Court judgement ordering Argentina to pay $1.33 billion to predatory hedge funds and holdouts led by NML Capital. The precedent the case sets impacts poor countries in financial distress and allows a small group of hedge funds to target debt relief assets that benefit vulnerable populations.
"The case impacts some of the poorest people in the world," commented Aldo Caliari of the Center of Concern and Jubilee USA board member. "It also has consequences for global financial stability."
In addition to noting the impact the Court's decision would have on vulnerable populations, Jubilee USA´s amicus brief argues that the behavior of these predatory hedge funds harms global financial stability, undermines core bipartisan United States policy and cites the International Monetary Fund is against such behavior.
The Supreme Court would likely decide by the summer whether or not it will actually hear the case. In a separate case currently before the Supreme Court, Argentina sought review of a lower court decision allowing NML Capital to target assets outside of Argentina. The United States filed an amicus brief in support of Argentina, arguing that Argentina's assets are immune from seizure under federal sovereign immunity law. These cases go back to 2001, when Argentina defaulted on roughly $81 billion in debt. Multiple hedge funds purchased debt for pennies on the dollar. These hedge funds are called "vulture" funds because they prey on countries in financial distress and target assets that benefit poor populations. The nearly 93% of bondholders who restructured their debts with Argentina have seen the value of their bonds increase. The holdout hedge funds that are suing Argentina refused the deal several times and have instead sued for the full amount of the debt they purchased.
Eric LeCompte, Executive Director of Jubilee USA reiterated, "While profiting off the backs of the world’s most vulnerable, these predatory funds seek to dismantle more than 15 years of bipartisan US debt policy."
You can read more about this case on Jubilee USA´s website. On Monday the brief and 75 organizations will be listed on the website.
Jubilee USA Network, a religious anti-poverty coalition, along with 78 other religious and development groups filed with the US Supreme Court in the case between Argentina and NML Capital
The Amicus Curiae brief takes the side of Argentina because the precedent of the case impacts predatory behavior on vulnerable populations. The friend-of-the-court brief argues that the case will have a detrimental impact on the poor, undo bipartisan United States debt policy and cause global financial instability. Filers joining Jubilee USA include: American Jewish World Service, Church World Service, Action Aid USA, numerous synagogues and churches across the US and a deluge of Catholic religious orders of nuns and priests. Read the full list of the 79 groups and Jubilee USA's Amicus Curiae.
"At the end of the day, this case is about a precedent that could expose developing economies to extreme predatory behavior," noted Kent Spriggs the attorney representing the 79 groups "The Supreme Court's decision will affirm or harm current bipartisan US debt policy."
The Supreme Court would likely decide by the summer whether or not it will actually hear the case. The case goes back to 2001, when Argentina defaulted on roughly $81 billion in debt. Multiple hedge funds purchased debt for pennies on the dollar. These hedge funds are called "vulture" funds because they prey on countries in financial distress and target assets that benefit poor populations. The nearly 93% of bondholders who restructured their debts with Argentina have seen the value of their bonds increase. The holdout hedge funds that are suing Argentina refused the deal several times and have instead sued for the full amount of the debt they purchased.
The Amicus brief quotes expert economists and lawyers, the International Monetary Fund, studies on debt, Adam Smith, Pope John Paul II and scriptures holy to Christians and Jews. "Our Supreme Court brief starts like a prayer, becomes a doctoral thesis summary and ends like a sermon," said Eric LeCompte, Executive Director of Jubilee USA Network. "This case will impact millions of poor people around the world and they deserve a hearing."
In addition to Jubilee USA and its partners, Brazil, Mexico, France and Nobel Laureate and former World Bank chief economist Joseph Stiglitz have announced their intention to file on behalf of Argentina. In addition to the International Monetary Fund, the World Bank has strongly criticized the behavior of these hedge funds, and the United States government has sided with Argentina in a related case before the Supreme Court. The international consensus against this behavior mirrors the bipartisan consensus around the very debt relief policy threatened by the actions of these predatory funds.
The brief powerfully examines the impacts of the case on future debt restructurings, poverty and the international financial system. The following are quotes pulled out from Jubilee USA Network's friend-of-the-court brief as submitted for filing:
"Because using law to dispossess the poor for the pleasure of the powerful offends not only the sense of justice embodied in United States policy, but the even more ancient principles of biblical justice revealed in the scriptures of our faiths, we respectfully submit this amicus curiae brief requesting that the Court accept certiorari."
"The opinion...now threatens to unravel United States debt relief policy and undo much of the progress made on behalf of the poor."
"The presence of even a single holdout can deter otherwise cooperative creditors from agreeing to restructure a country's debt...the...decision below would make holding out and suing...the most rational strategy for creditors."
"Allowing the decision below to stand would...equip financial companies that prey on the poorest nations and people of the world with a game-changing legal precedent to accelerate their predation."
"If allowed to stand, the decision in this case...has the potential to generate systemic risks in the international system."
"Upholding the decision...would harm or frustrate numerous established policies of the United States...[that] began during the Bush administration and have been continued by the Obama administration."