Congresswoman Waters Introduces Bill to Protect Poor Countries from VULTURE Funds
Congresswoman Maxine Waters (D-CA) today introduced the Stop Very Unscrupulous Loan Transfers from Underprivileged countries to Rich, Exploitive Funds or "Stop VULTURE Funds" Act (H.R. 2932), legislation designed to protect impoverished countries from lawsuits by so-called vulture funds.
Congresswoman Waters said, "Over the past year, we have seen how the actions of a small number of unscrupulous and exploitative investors can hurt innocent people and cause economic chaos. We cannot allow the world's poorest countries to be exploited by these bad actors."
Vulture funds are private investment funds that buy up the debts of poor countries at reduced prices, usually for pennies on the dollar. They then sue these countries to recover the original value of the debts plus interest. Several poor countries that have received debt cancellation from the United States, other participating donor countries, and multilateral financial institutions have subsequently been sued by vulture funds.
Congresswoman Waters said, "The Stop VULTURE Funds Act would protect impoverished countries from the predatory practices of vulture funds and allow these countries to use their limited resources to meet the needs of their people."
The Stop VULTURE Funds Act would make it illegal for vulture funds to use U.S. courts for the purpose of suing poor countries to obtain usurious payments. Any lawsuit demanding more than the amount the investment fund paid to buy the debt plus 6% interest per year would be considered usurious. Any fund pursuing a lawsuit against a protected poor country would be required to provide disclosures to the court in order to prove the fund is complying with the law. Countries that commit gross violations of human rights, engage in excessive military spending, support terrorism, or fail to cooperate with the United States on narcotics control matters would not be protected under this bill. Investment funds would still be allowed to buy and sell poor country debts on the open market and negotiate with poor countries to obtain payment.
Congresswoman Waters has led congressional efforts to cancel the debts of the world's poorest countries. Over the past ten years, more than twenty impoverished countries have received debt cancellation. During the 110th Congress, she introduced H.R. 2634, the Jubilee Act, which makes up to 25 additional low-income countries eligible for debt cancellation, provided that these countries use the savings for poverty reduction programs. The Jubilee Act was passed by the House of Representatives on April 16th of last year, although the Senate did not have time to consider the bill.
Congresswoman Waters said, "I am proud of my work in Congress to cancel poor countries' debts. We cannot allow vulture funds to erode the progress that has enabled many of the world's most impoverished nations to reduce poverty."