A House committee will hear Treasury's Antonio Weiss discuss an analysis of Puerto Rico on Feb. 25, as lawmakers coalesce around a bill that would give the territory's authorities bankruptcy access in return for creation of a financial stability council, Bond Buyer reported today. The exact language of the bill, sponsored by Rep. Sean Duffy (R-Wis.) may not be included in final legislation, but lawmakers think the bill could serve as the foundation for legislation that joins the Republican support for a fiscal control or oversight board with the Democrat's call to give the territory's authorities the ability to restructure their debt. Weiss, a counselor to Treasury Secretary Jack Lew who has worked to resolve Puerto Rico's debt crisis, said at a Feb. 5 panel on the commonwealth sponsored by the Bipartisan Policy Center, that he has seen "very positive discussions taking place on both sides of the aisle" in Congress. He also pointed out that there now seems to be more agreement that any plan to help the commonwealth should include both restructuring and oversight. Read more.
In related news, Richard Ravitch, an adviser to the governor during New York City’s fiscal crisis in the 1970s, said that Puerto Rico needs to have broad bankruptcy powers to reduce its $70 billion of debt and revive its economy, Bloomberg News reported yesterday. The Caribbean island of 3.5 million and its agencies are unable to file for bankruptcy protection, as cities including Detroit have done. Puerto Rico Governor Alejandro Garcia Padilla has been seeking to persuade Congress to give the island some legal ability to restructure its debt to strengthen its hand with creditors. Ultimately, federal lawmakers will likely grant Puerto Rico’s request, said Ravitch, a former New York Lieutenant Governor who’s working as an unpaid adviser to the island. “The risk of social disorder and consequential responsibilities for the federal government will ultimately make all of Congress realize that this has to be done,” Ravitch said. He said the plan should include a “federal oversight board insuring that the restructuring plan is fair to the people of Puerto Rico. In the long term of the creditors, it’s the only way of solving the problem.” Read more.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
