With Puerto Rico buried in debt and on course to completely run out of money by the end of the year, the Obama administration is urging Congress to take unprecedented action to help the island, including granting a type of bankruptcy protection unavailable to the nation’s 50 states, the Washington Post reported today. The administration said that the broader bankruptcy protection, which would be available only to territories but not fiscally pressed states, is needed to help Puerto Rico avert a mushrooming crisis and restructure its $73 billion in debt. In addition to urging Congress to offer Puerto Rico this new type of bankruptcy protection, the administration is also recommending that Congress broaden access to the island’s Medicaid program, a move that would pump money into its teetering health care system. Finally, the administration said, Congress should install a control board to oversee the island’s finances and ensure that they are being handled in a responsible and transparent manner. The proposal comes in advance of a Senate Energy and Natural Resources Committee hearing today looking at Puerto Rico’s debt crisis. Read more.
To read the Obama administration’s proposal, please click here.
Rep. Pedro Pierluisi is set to testify at today’s hearing. For his statement on the Obama administration’s proposal, please click here. Rep. Pierluisi is the invited keynote speaker for ABI's Winter Leadership Conference. Click here for more information and to register.
For more information on today’s Senate Energy and Natural Resources hearing at 10 a.m. ET, please click here.
In related news, Puerto Rico’s Government Development Bank said that talks with a group of bondholders over a restructuring of the agency’s debt and potential financing have ended after they failed to reach an agreement, Bloomberg News reported yesterday. The development bank, which is closely tied to other government borrowers because it acts as a lender to the commonwealth and its localities, said in an e-mailed statement yesterday that it continues to focus on a broader restructuring that would allow bondholders to voluntarily exchange their securities for new ones. Read more.
For the latest news and analysis of Puerto Rico’s ongoing debt crisis, be sure to visit ABI’s “Puerto Rico in Distress” webpage.
