Spain's Most Toxic Export
From its role in helping cause Puerto Rico's debt crisis, to its predatory subprime auto lending business, to its potential connections with a tax evasion/money laundering scheme, Banco Santander's business practices are toxic. It is time to ban Spain's most toxic export from business with our communities.
Banco Santander helped cause Puerto Rico's debt crisis by targeting the island with predatory loans that cost taxpayers billions of dollars. The bank was one of the underwriters on more than $60 billion in Puerto Rico's bonds. Now the Commonwealth is closing schools and hospitals and implementing other harsh austerity measures so that it can pay back its unsustainable debt load. Ironically, two men who were high-ranking Santander executives at the time that the bank sold the Commonwealth these toxic deals now sit on its federally-appointed Fiscal Control Board, known locally as "La Junta".
Read our partners' reports about Santander and Puerto Rico below.
Banco Santander executives' revolving door with Puerto Rico's debt management authority cost Puerto Ricans billions of dollars. Click here to read the report by Hedge Clippers and the Committee for Better Banks.
Carlos García, a former Santander executive who now sits on Puerto Rico's Fiscal Control Board, liquidated the island's infrastructure fund, diverting more than $1 billion that had been dedicated to essential water and sewer projects into a series of financial transactions that ultimately pushed the infrastructure fund toward insolvency. This has left Puerto Rico unable to modernize its water and sanitation systems, putting public health at risk. Click here to read the report by the Federación de Trabajadores de Puerto Rico, AFL-CIO, and Hedge Clippers.
Subprime Auto Loans
Santander Consumer USA Holdings, Inc. is the biggest packager of subprime auto loans in the United States.
- These are predatory loans that have egregious fees and interest rates that can leave borrowers with a $10,000 bill on a $750 car loan.
- In January 2017, the Mississippi Attorney General filed a class action consumer lawsuit alleging Santander originates loans it knows subprime customers cannot repay because it can turn a profit in as little as 3 to 6 months.
- Like the subprime mortgages that caused the foreclosure crisis, subprime auto loans typically target working class communities of color.
- Banco Santander was also significantly more likely than other auto lenders to make "liar loans" that did not verify borrowers' income.
- The bank reached a settlement to pay $25 million in fines related to its subprime auto lending business in March 2017.
Money Laundering Investigation
Spain's High Court has summoned seven current and former Santander bankers in connection with a money laundering investigation.
- Documents provided by the bank itself and by Spanish regulators showed that money was moved between accounts at Banco Santander, BNP Paribas, and HSBC, hidden from tax authorities.
- The investigation will help determine if this was part of an illegal money laundering scheme to help wealthy individuals evade taxes
Santander in the News
The Bankers Behind Puerto Rico's Debt Crisis
Michelle Chen | The Nation | 6.9.17
Liar Loans Dog Subprime Auto-Loan-Backed Securities
Wolf Richter | 5.24.17 | Seeking Alpha
Auto Lender Santander Checked Income on Just 8% in Subprime ABS
Matt Scully | Bloomberg | 5.22.17
Spanish court to question Santander, BNP bankers in HSBC tax probe
Angus Berwick and Jesus Aguado | Reuters | 5.3.17
Students Are Now Leading the Resistance to Austerity in Puerto Rico
Ed Morales | The Nation | 4.27.17
Santander Unit to Pay $25 Million Over Subprime Auto Loans
Erik Larson | Bloomberg | 3.29.17
Puerto Rican debt crisis enriches CEO charged with fixing it
Julie Pattison Gordon | Bay State Banner | 3.29.17
Fed orders Santander to improve oversight of its troubled subprime auto lender
Greg Robb | MarketWatch | 3.23.17
Two of Puerto Rico's New Overlords Are Accused of Helping Create Its Debt Crisis
Daniel Marans | Huffington Post | 12.17.16
Deep conflicts of interest plague Obama's newly appointed fiscal control board in Puerto Rico
Saqib Bhatti | The Hill | 9.9.16
Police search Santander's Madrid HQ in money laundering inquiry
Stephen Burgen | The Guardian | 6.3.16