José E. Fernández Bjerg cannot pinpoint the exact year, but he remembers clearly the day he escaped from the farm his grandfather managed in Santa Isabel and reached the cane-field workers' houses. He was really curious to see where the children he played with lived.
What he saw there marked the rest of his life. The children were walking barefoot, naked or in "rags". The houses were battered and overcrowded. It was the first time he had ever seen extreme poverty so close. That was not how people should live.
"It was extremely sad... It was extreme poverty. It was a big shock," said Fernández Bjerg who was about 10 when he faced poverty for the first time.
Since then, Fernández Bjerg developed two major life goals: to earn as much money as he could and to use those funds to fight poverty, the one he saw in what now is the community of Playita Cortada in Santa Isabel. And this 76-year-old man has had great success in both goals.
"If I didn't have money, I couldn't help," said Fernández Bjerg -who played a key role in the transformation of Banco Oriental- during La Gran Entrevista (The Big Interview) by El Nuevo Día.
He was in a good position to take on such a task. He came from a wealthy family that lived in Miramar in the mid-20th century. He attended primary and secondary school at the Academia del Perpetuo Socorro and received his bachelor's degree in Finance and Economics from the University of Notre Dame in Indiana, where years later he would serve as trustee.
After graduating, he began working as an investment broker, including bonds issued by the Puerto Rican government on Wall Street. When he turned 26, he had made enough money to live comfortably for the rest of his life.
"I was working with 936 corporations (corporations that benefited from Section 936 of the U.S. Internal Revenue Code). And Puerto Rican bonds were also good because they didn't pay taxes. This was between 1965 and 1970," he recalled.
Was it possible to anticipate what we are experiencing today back then?
-No... We saw Puerto Rico's economic problem with the loss of Section 936. That's when everyone took the money out of Puerto Rico and everything began to collapse.
The current crisis is far from the first decades of his career when Puerto Rico was living through the years of economic bonanza which allowed for certain creativity in investments. Section 936 corporations, for example, had to maintain their deposits on the island and that money was used to invest in real estate, the mortgage market, and the stock market.
In the mid-1980s, Fernández Bjerg set his second great goal in life: fighting poverty.
He came back to Puerto Rico after a successful career in New York. Here, a group of Salesians took him to the Cucharillas community in the Palmas de Cataño neighborhood. In addition to extreme poverty, many of the residents were struggling with alcoholism and male violence.
"We thought that if we were able to build up the self-esteem of the community, things would get better," he said. And Fernández Bjerg founded the Asociación Pro Juventud de Cucharillas along with a group of residents and Salesians.
The first thing they achieved was to establish a Head Start Center in the community. Every year, they would bring university students to complement their studies working with the community. They opened a grocery store where neighbors sold the products they made and even opened a community kitchen.
"It's an incredible project. I left the project in 2003 because I couldn't take care of it anymore," he recalled with nostalgia.
He would raise funds for the community in his own house. When his fellow bankers were not sure whether to donate to the project, he would ask their wives and they convinced them, he said.
Have you ever reflected on the two very different worlds in Puerto Rico? There are very few who are extremely wealthy and many people live in extreme poverty.
Yes, here, we are not truly dedicated to helping the less wealthy. On the contrary, they are making decisions that affect them negatively all the time. We saw that when they raised tuition fees at the University (of Puerto Rico), despite students with serious economic problems, some of whom don't even have enough money to eat.
It seems that no one is aware that, if the lower classes move up, the economy improves in general terms and that is good business for everyone, including the rich...
-They don't even see that.
-Because of the education of the rich. They don't understand that. In my case, I believed that you have to do things to deserve something... and I also don't like paying taxes to the government because they don't do anything good with the money and, well, I'd rather donate 10 percent or 20 percent of my income, and then do what I have to do and I see the results myself.
The key is education
The first years after returning to Puerto Rico, Fernández Bjerg focussed on his role as trustee of the University of Notre Dame. There, he helped manage and strengthen the university´s scholarship program. What he learned there motivated him to establish in 1984 his own scholarship initiative to help finance the studies of Puerto Ricans at this Indiana university.
In the beginning, he paid the scholarships with his own money. He then set aside a fundto invest in the stock market and used to cover students' scholarships with the profits.
The initiative that began with just a handful of students years later would inspire the Kinesis Foundation, through which Fernández Bjerg, along with some collaborators, helps to -academically and financially- prepare dozens of young Puerto Ricans with high academic achievement and limited economic resources
"What I want is for them to get there. Studying is the basis. That is what makes you successful in an industry," said the banker, who repeatedly expressed criticism of budget cuts and the increase in UPR tuition fees. Former Governor Ricardo Rosselló Nevares administration proposed those changes that were endorsed by the Oversight Board.
How do you see the decisions made by the Board in this crisis?
-At first, I thought it was going to work (the Board), but as soon as I saw the politicians working with them, well I understand that progress began to be watered down. When I saw that they changed how to fund the University, I thought that was murder. People have to understand that what they are doing with the University is a serious problem. People have to protest. The same thing that happened in July is what has to happen with the University and with education. I don't know why people aren't angry because of that. We have to take away the university from politicians.
What do you think people should do about it?
-Right now, the only way I see you can fight this is in the streets, like we did last summer. We cannot go on like this. We must all unite. This cannot be young people fighting alone. They should all join this fight, those who are 40, 50, 60…This is for our children and grandchildren.
What do you think of the summer protests?
-I was fascinated. There were 500,000 or 600,000 people against PROMESA and all the things the government was doing. I was there and all I saw were young people who were 25 or 30 years asking for a change. If we educate those young people well, (the future) it's going to be incredible, but if we don´t, then it will be fatal. And right now we are not doing it well and that keeps them in ignorance. Politically that may benefit some. Look at those who follow (Donald) Trump. They are ignorant. They don't know how to analyze the consequences of what he (Trump) is doing.
When do you think the economic problem got out of hand?
-I think the moment we eliminated Section 936, that destroyed everything. We had a false economy for 10 years (from the moment the elimination was approved until it was implemented). In 2006, we started borrowing and borrowing and reached $70 billion in debt. And there were problems in the Retirement Systems because they didn´t make the contributions to the fund. Here credit unions were even forced to invest in GDB (Government Development Bank) bonds that they had no collateral when the Bank was bankrupt. And no one did anything. No one does anything here.
Don´t you think that somehow no one does anything because people are afraid to challenge the government or the parties?
-(He mentioned fundraising activities by the 'Empresarios con Pedro Rosselló' in the 1990s) What was that for? So that they would get you appointments and you would have advantages over the others and those who were inside didn't do anything so that they wouldn't get them out. After that, politicians continued with that practice.
A life in the banking sector
Fernández Bjerg began his career when Puerto Rico had one of the most advanced banking systems with large margins, partly due to provisions in Section 936 of the U.S. Internal Revenue Code, which encouraged foreign industries to maintain their deposits at banks with operations on the island.
However that changed when those incentives were eliminated, the Puerto Rican manufacturing industry contracted and banks were hard hit in 2010 when the Federal Deposit Insurance Corporation (F.D.I.C.) closed the Eurobank, Westernbank, and R&G. The same thing would happen to Doral Bank five years later.
The market exit of Scotiabank and Banco Bilbao Vizcaya Argentaria (BBVA) also hit the banking sector.
You devoted your life to investment banking and commercial and savings banking. What does it tell you that the industry has shrunk to the point that there are only three big commercial banks left?
-That's crazy. And it has its effects. They are not lending money right now. And credit unions are the ones covering what banks don't do. Banks offer car loans, home loans, insignificant things, but when you ask for $400,000 or $500,000, well that is very difficult because they don't see the solution to the island's economic situation.
What does the contraction of the banking industry tell us?
-That they are leaving because they don't see the future of Puerto Rico. I don't believe in this. I think we are at the bottom and, if we pull and look, we can go up. If we don't, we'll stay at the bottom.
Where do we have to look?
-Agriculture is something we've been destroying for decades. Nobody paid much attention to it. In the 1970s, when the eight leading pharmaceutical companies arrived in Puerto Ric, agriculture became less and less important. It's not that we produce sugarcane, as we used to do. We have so many special products that we can export... I was the owner of (what now is) the Martex farm in Santa Isabel. And there diversified the farm and included other products. I included five products and we did very well. It´s this type of action (diversification) what will help us.
Will that be enough to improve production?
-I'm doing what I can do from where I am. I would encourage people to invest in agriculture. There is a group here planting cocoa and then the Cortés family, who are making additional products with cocoa. That's an example of what can be done. They are trying to reach global levels. What is lacking here is private capital to invest in agriculture. But none of this is done overnight.
Where can this private capital come from?
-The government has to address that issue. If it's a company that's already making money, that's where you invest. Entrepreneurs are not going to go out and create jobs with something from scratch. What you should do is start expanding the production you already have and bring it to Europe and other markets.
In 2004, Fernández Bjerg began his transition to retirement which finally happened in 2006, when Oriental Bank announced his retirement as chairman of the bank's board of directors.
Since then, Fernández Bjerg has focused most of his efforts to the Kinesis Foundation, which he created along with his family and friends in an attempt to provide educational opportunities to talented students in Puerto Rico.
The Foundation helps students to prepare academically and access different scholarships for university studies in Puerto Rico, the United States or other international universities. They also provide financial aid for low-income students.
This initiative has been growing, especially in recent years. For example, in 2011, with the help of the Foundation, 15 students graduated, four of whom studied at US universities. By May 2019, there were 113 graduates. 48 percent (54) of them hold diplomas from the most prestigious US universities, such as Princeton, Harvard, Columbia, Stanford, Duke, John Hopkins, Cornell, Notre Dame, and Georgetown, among others.
In this decade alone, the Foundation has helped or boosted the careers of 689 Puerto Rican students.
The initiative includes a process to prepare students for university life. They reinforce skills, especially in the use of technologies, so that students develop the skills to succeed in admission exams.
Fernández Bjerg explained that they are now complementing the initiative with a program that seeks job opportunities in Puerto Rico for students studying abroad with the help of the Foundation. This way, investment in the education of these young people would have an impact on the local economy.
"They make a commitment that they have to return and make sure that the next generation has the same opportunities they had," he said.
Parity in funding
Fernández Bjerg´s major efforts in recent years have also focused on identifying strategies for Puerto Rico to obtain parity funding in the federal Medicaid, Medicare and Supplemental Social Security (SSI) programs.
The banker finds the notion that Puerto Rico should not have parity because neither corporations nor individuals pay federal taxes challenging. Then, he pulls out a chart prepared by the federal government that shows that Puerto Ricans pay annually between $4.5 billion and $3 billion in federal taxes.
He argues that if Puerto Rico had access to SSI, the most economically disadvantaged families could have, on average, access to $1,500 monthly which could significantly change the quality of life of these people.
"It would be money that reaches the people and not the government... To change this right now we need 800,000 people on the street protesting, like what happened last summer," he said, pointing out that this issue must be addressed beyond party lines.
Fernández Bjerg does not necessarily expect a movement like this right now. Instead, he has funded the U.S. Citizens For Equal Protection movement, which develops legal and political strategies to advance the issue of federal funding parity for Puerto Rico.
He has also contributed to pay the attorneys working in a lawsuit demanding that residents of Puerto Rico can fully access the benefits of these federal programs.
"We have to dare to take those important cases for Puerto Rico. I don't have a party. This has to be neutral. This must be motivated by the need we have and not by an ideal," he warned.
What motivated you to get into the issue of U.S.-Puerto Rico relations and parity of funds?
-I had never paid attention to the issue of the political status or parity of funding because I was too busy with other things. But, one day I read the GAO report and then I paid attention to it.
Among other things, the report, published in 2014, states that if Puerto Rico were a state, the federal government would have to invest more than $5.2 million annually to fund U.S. programs to which the island does not have full access. This, however