Federal Reserve Bank of New York President William C. Dudley urged Congress to pass a bill that would allow some agencies of Puerto Rico to file for chapter 9 protection, Bloomberg News reported yesterday. “I think that would be helpful, because it could help facilitate an orderly restructuring of their debt,” something that is “probably going to turn out to be necessary,” Dudley, whose district includes Puerto Rico, said yesterday. While such restructuring might not be easy, the risk of Puerto Rico’s troubles spreading to the rest of the country is “pretty low,” because the problems are unique to the island and already reflected in the prices of the commonwealth’s securities, Dudley said. Puerto Rico’s non-voting member of Congress Pedro Pierluisi and Democratic Senators Chuck Schumer and Richard Blumenthal introduced bills extending chapter 9 bankruptcy protection to the commonwealth. The Republican leadership in control of both chambers of Congress didn’t advance the measure. Lawmakers won’t be able to act on the legislation until they return from recess on Sept. 8.
