In Congress Beto O'Rourke Took Money from a Hedge Fund King Who's Sucking the Life from Puerto Rico. Will Beto Take His Money Again?

by Thomas Neuburger

Short and dirty. Via David Dayen, writing at the American Prospect (emphasis added):

What passes for much “campaign-finance” reporting in America typically follows the flow of cash from big bundlers to particular candidates, treating the whole thing like a competition over who “got” what rich person to invest in them. Rarely is the central question asked of how that rich person earned their money, and what effect that will have on the candidate’s outlook. In other words, it’s not just the power of Big Money, but what specific kind of Big Money, that often gets overlooked.

Yesterday presented a perfect example. Mark Gallogly, a founder and managing partner of Centerbridge Partners, indicated to friends that he would support former Texas Representative Beto O’Rourke as his 2020 candidate, according to CNBC. Gallogly is enthusiastically described as an “Obama bundler” who raised at least $500,000 for the former president in 2012.

So, what does Centerbridge Partners invest in? Something politely called "distressed debt" — the IOU's of entities that have no ability to repay.

To take an example involving humans, imagine someone who bought all the credit card debt of your nearly bankrupt brother — at pennies on the dollar — then tried in every way possible to force your brother to pay up. That's what "investing in distressed debt" looks like, and there are companies that do just that to living persons.

Now imagine investment firms that do this to whole countries. That's Centerbridge Partners. Its victims include the nation of Argentina ... and Puerto Rico. The plan is a good one — they purchase the bonds of these entities for pennies on the dollar, then use political pressure, including bought pressure from the U.S. government, to force them to make the bonds good at 100 cents on the dollar.

[Centerbridge Partners is] a $30 billion hedge fund. Those suffering from the after-effects of its strategies would describe Centerbridge as a “vulture fund.” It scoops up debt on the cheap, and uses whatever means necessary to force the troubled company or sovereign government to pay up. Centerbridge debtors include bankrupt utility PG&E, the country of Argentina, and Puerto Rico.

That's the kind of person Mark Gallogly is. Dayen again:

That any presidential candidate would even consider taking money from one of the vulture funds who participated in the Puerto Rican carnage is unthinkable to local activists. “Voters are watching, and they know that vulture hedge fund money is toxic,” said Julio López Varona from CPD Action and the Hedge Clippers coalition, which educates the public about the role of hedge funds in Puerto Rico and other areas. “They are seeking to get rich by making Puerto Rico poor. Any presidential candidate should know that Puerto Ricans in the diaspora can determine the election of the next US President and they will not support so-called progressives that take their money from those who have caused so much pain for our communities.”

Yet "Beto" O'Rourke has taken Gallogly's money before:

O’Rourke’s spokesperson, Chris Evans, did not respond to a request for comment on the matter, or whether the candidate would accept the bundled cash raised by a vulture fund giant. ... Then again, he did take $5400 in donations from Gallogly in 2018 for his near-miss Senate run, and over half of his $80 million haul in that race came from big donors.

Will the Hispanic-sounding white guy — Robert Francis O'Rourke is 4th generation Irish — take Gallogly's money again? As the original Mayor Daley used to say, "Youth wants to know."

So, I would imagine, would Democrat-leaning Hispanic voters in 2020.