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Dr. Denise Faustman
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Watch Dr. Faustman's interview about the Phase I trial
Your donation will directly support our Phase II research.
Raised to date: $18.4 million
Our total need: $25.2 million.
Raised to date: $18.4 million
Our total need: $25.2 million.
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Interested in the Phase II Trial?
The Faustman Lab at Massachusetts General Hospital
Denise Faustman, MD, PhD, is Director of the Immunobiology
Laboratory at the Massachusetts General Hospital (MGH) and an Associate
Professor of Medicine at Harvard Medical School. Her current research
focuses on discovering and developing new treatments for type 1 diabetes
and other autoimmune diseases, including Crohn's disease, lupus,
scleroderma, rheumatoid arthritis, Sjögren's syndrome, and multiple
sclerosis. She is currently leading a human clinical trial program
testing the efficacy of the BCG vaccine for reversal of long-term type 1
diabetes. Positive results from the Phase I study were reported in 2012.Dr. Faustman's type 1 diabetes research has earned her notable awards such as the Oprah Achievement Award for “Top Health Breakthrough by a Female Scientist” (2005), the "Women in Science Award" from the American Medical Women’s Association and Wyeth Pharmaceutical Company for her contributions to autoimmune disease research (2006), and the Goldman Philanthropic Partnerships/Partnership for Cures “George and Judith Goldman Angel Award” for research to find an effective treatment for type 1 diabetes (2011). Her previous research accomplishments include the first scientific description of modifying donor tissue antigens to change their foreignness. This achievement earned her the prestigious National Institutes of Health and National Library of Medicine “Changing the Face of Medicine” Award (2003) as one of 300 American physicians (one of 35 in research) honored for seminal scientific achievements in the United States.
Dr. Faustman earned her MD and PhD from Washington University School of Medicine in St. Louis, Missouri, and completed her internship, residency, and fellowships in Internal Medicine and Endocrinology at the Massachusetts General Hospital in Boston, Massachusetts.
© 2014 Massachusetts General Hospital
Antonio Weiss, the former Wall Street banker who became a top adviser to the Treasury secretary this year, has made two trips to Puerto Rico in recent weeks.
Kent Hiteshew, who runs the Treasury Department’s office of state and local finance, has also met with government officials in San Juan multiple times this spring.
The
Treasury Department is quietly stepping up its involvement in Puerto
Rico, indicating that the island’s financial problems, which have been
simmering for years, are reaching a critical point. High-ranking
officials have been shuttling between Washington and Puerto Rico,
advising commonwealth officials as they try to stabilize the island’s
finances.
But
it is a quandary with no clear-cut solution and potentially
far-reaching effects. Puerto Rico is struggling with far more debt than
analysts believe it can repay, and no legal framework exists to reduce
the burden. Financially troubled cities and counties in the United
States can take shelter in bankruptcy court, but federal law denies that
option to United States territories and commonwealths, and attempts to
amend the law face an uphill battle.
Neither
a federal bailout nor a takeover of the island’s finances by the
Treasury is under discussion, according to officials briefed on the
matter who spoke on the condition of anonymity.
“The
big issue is liquidity, which they seem to be running out of quickly,”
said Joseph Rosenblum, director of municipal credit research at
AllianceBernstein, which over the last few years has sold nearly all its
Puerto Rico debt holdings.
On
a per-capita basis, Puerto Rico’s debt load of $73 billion is bigger
than that of any state. Much of it is owned by middle-class Americans
who bought the island’s municipal bonds
indirectly, as part of their retirement accounts, so any default would
reverberate far past Puerto Rico’s shores. But to avoid a default in the
near term, Puerto Rico has little choice but to add to the mountain of
debt and is seeking to borrow as much as $2.9 billion more this spring.
Treasury
officials have been encouraging the commonwealth to come up with a
long-term fiscal plan and to find ways to maintain credibility with
skittish bond investors, who are proposing increasingly stringent
demands before they will lend more money.
A
group of hedge funds, for example, is demanding that as one condition
of lending $2.2 billion to Puerto Rico, lawmakers must balance its
budget for the long haul or agree to be found in default if a gap
emerges — an almost unheard-of requirement in the municipal bond
market, where cities have access to credit no matter how many gimmicks
it takes to close their books. The bond would be paid for by a fuel tax,
a proposal that has angered some island residents who say the
government is putting the needs of Wall Street creditors over those of
the general populace.
Treasury
officials are steering clear of negotiations between the commonwealth
and the hedge funds, but they are encouraging the government to find
ways to stabilize its finances beyond borrowing more money, the people
briefed on the matter said.
For
years, Puerto Rico has bounced from one bond deal to the next,
borrowing billions of dollars to fill budget gaps or to make interest
payments on previous debt. Investors, for the most part, have been
willing to lend the government as much money as it wanted because the
yields on the bonds were so lucrative and the interest on the bonds is
tax-exempt to investors in all 50 states. The commonwealth’s pledge to
pay back its debts also seemed ironclad.
But
that changed last summer when lawmakers passed the so-called Recovery
Act, which would give the commonwealth the legal tools it needed to
restructure the debt of some of its public corporations. The law
threatened longstanding protections for bond investors and seemed to
conflict with officials’ claims that Puerto Rico intended to pay its
debt. A federal judge ruled the restructuring law was invalid, and the
commonwealth has appealed. But Puerto Rico’s credibility with investors
and credit analysts was badly damaged.
Further
fanning investors’ fears was a recent proposal by a group of Puerto
Rico lawmakers that would effectively allow the commonwealth to default
on its general obligation debt.
Even
though such proposals appear to lack broad support in the legislature,
credit analysts say that at least one Puerto Rico municipal bond issuer,
the Puerto Rico Electric Power Authority, is likely to default on its
debt this year. Moody’s Investors Service expects that the power
authority will skip a debt payment that is coming due in July.
”Puerto
Rico has indicated it is no longer going to move heaven and earth to
support its debt,” said Ted Hampton, a senior analyst at Moody’s, which
rates Puerto Rico debt as junk. “That’s a major divergence from past
practice and policy.”
As
Puerto Rico’s problems deepen, existing creditors are grabbing whatever
security they can to protect their investments. Normally, a hierarchy
of creditors emerges in a bankruptcy case, but because Puerto Rico
cannot seek bankruptcy court protection, it is not clear how its various
types of debt and creditors would be ranked.
Municipal
bond holders are still recovering from the shock they endured in
Detroit’s recent bankruptcy, where the city’s bonds were impaired more
sharply than the city’s pensions, and some debt instruments were
threatened with outright repudiation.
Investors
who hold some of the $9 billion of debt issued by Puerto Rico’s
electric power authority fear something similar could happen to them.
With cash getting tight this summer, they say the government may default
on those bonds to conserve cash to pay other debts, especially
general-obligation bonds, which have a constitutional guarantee.
Investors
in the electric authority’s bonds have already offered debt forbearance
and extended it several times, in hopes of getting a consensual
restructuring deal. Another deadline falls on Wednesday, and the Puerto
Rican legislature will hold a hearing on Tuesday on why there has been
so little visible progress. If the talks fail, and the electric
authority defaults, it could spoil appetites for the $2.2 billion of new
debt for the commonwealth that the hedge-fund group has been pushing.
Investors
say the public would rally to the cause of nonpayment, because electric
rates are high on the island and service is poor.
Many investors are putting their faith in the federal government to find a way to sort out the mess.
Some
bond investors have suggested that, should Puerto Rico get shut out of
the debt markets, the Government Development Bank could borrow from the
Federal Reserve’s discount window, just as teetering Wall Street banks
did during the financial crisis.
But
the Government Development Bank, which oversees the commonwealth’s debt
deals and lends money to the island’s municipalities and public
corporations, is not a traditional bank. It may not be impossible for
the bank to borrow from the Fed, but it would face multiple regulatory
hurdles to qualify for access to the discount window.
Hedge
funds that own more than a quarter of the island’s debt have also
raised the possibility that Puerto Rico could be placed under some kind
of federal receivership or control board like the one the federal
government imposed on Washington in the 1990s. Because Puerto Rico is a
commonwealth, they argue, the federal government could also take over
its finances.
A
federal takeover seems unlikely, particularly because Puerto Rico’s
residents have debated for years about whether they want to remain a
commonwealth, become a state or break away entirely from the United
States. A control board could exacerbate these tensions.
“It
would be offensive. It would show a lack of respect,” said Pedro R.
Pierluisi, who is Puerto Rico’s representative in Congress.
Puerto
Rico’s relationship with the federal government is a double-edged
sword. On one hand, its residents, many of whom pay no federal income
tax, receive a lot of federal aid — an estimated $6 billion this fiscal
year. That is down from $6.3 billion in fiscal year 2014. That money
supports a range of benefits like water treatment in Puerto Rico’s rural
areas and children’s nutrition programs.
On
the other hand, Puerto Rico lacks a full voting member in Congress,
where a key initiative to sort out its debt problem now lies.
Mr.
Pierluisi, who cannot vote on the House floor, has proposed a bill that
would allow some of the commonwealth’s public corporations, like the
electric authority, to seek federal bankruptcy protection.
The
bill has drawn the ire of a Tea Party group and the lobbyists hired by
some of the investors that own the public corporations’ bonds.
“I want insolvencies in Puerto Rico to be handled the American way,” Mr. Pierluisi said.
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