Congress Moves Closer on Puerto Rico's Debt Crisis
Sharon Edmondson, Washington Legislative Team Member | January 07, 2016
Momentum is building for Congress to address Puerto Rico's fiscal crisis early this year as the island becomes increasingly likely to default on its crushing $73 billion debt.
House Speaker Paul Ryan in December directed congressional committees with jurisdiction over the commonwealth's affairs to come up with a legislative fix by March 31. Republicans have resisted any plan that would reward Puerto Rico for years of deficit spending, but some are now coming around to allowing limited debt restructuring as a way to avoid a potential taxpayer bailout down the road. The question will be where to draw the line - and what kind of oversight would be attached.
Debate will likely focus on whether Puerto Rico’s municipal agencies should be allowed to declare Chapter 9 bankruptcy. President Obama and the government of Puerto Rico want to go even further and allow the commonwealth’s entire government to restructure its debt. Two previously introduced bills one in the House, HR 4199, which would grant Chapter 9 in exchange for a federal fiscal control board and the other in the Senate, S 2436, was introduced by a group of senators lead by Elizabeth Warren (D-MA), which would shield Puerto Rico from lawsuits and other attempts at debt collection until March 31.
Deals with creditors could happen but Congressional action remains the most likely opportunity to prevent default.
View the bills - House Bill HR4199 Senate Bill S2436