“Vulture” Loans Threaten Developing Nations

By Amanda Reid, Esq.

October 2015

When an individual, a corporation, a city, or even a state is unable to pay its debts, it can file for bankruptcy and restructure the debt. Not so for nations. When Argentina defaulted in 2001 and then successfully issued new debt for old, a handful of well-connected investors swooped in, bought the old debt for pennies on the dollar and obtained a judgment giving them a 1600+% profit and forcing what one U.S. judge called a default, while a British court has declared the U.S. judge and bank responsible. The Argentineans called the investors “vultures” for obvious reasons. Less obvious is the fact that, as the U.S. government has argued, this court decision undermines the dollar itself as currency for international trade, and it threatens the U.S. economy itself. Find out why.