Legislation to help Puerto Rico restructure its $72 billion in debt was introduced in the House of Representatives yesterday, as members sought to address the island’s financial crisis quickly without setting a precedent that troubled states might try to follow, the New York Times reported today. The text of the bill showed numerous revisions written in by hand, suggesting that lawmakers had engaged in last-minute efforts to balance competing interests. For months, Democrats have been calling on Congress to help Puerto Rico, warning of a humanitarian crisis, while many Republicans have expressed discomfort over any measure that might be seen as a taxpayer bailout. The bill, which would give Puerto Rico certain powers that are normally available only in bankruptcy, is scheduled to be the subject of a hearing before the House Natural Resources Committee today and receive final amendments tomorrow before being sent for debate on the floor of the House next week. Rep. Sean P. Duffy (R-Wis.), who supported earlier efforts to give Puerto Rico direct access to chapter 9 municipal bankruptcy, introduced the bill yesterday. In particular, it would give the island the power to unilaterally discharge debt and to force creditors to accept settlements for less money than they were seeking. The bill also contains provisions meant to reassure Puerto Rico residents that Congress does not want to sideline their elected government during the coming debt negotiations. A previous draft of the bill would have created an oversight board with significant power over Puerto Rico’s economic affairs, such as raising taxes if necessary and repealing certain laws. Read more.
Link to H.R. 4900, the “Puerto Rico Oversight, Management, and Economic Stability Act” (PROMESA).
Click here for information on the House Natural Resources Committee hearing today at 10 a.m. ET titled “Legislative Hearing on a Discussion Draft of the "Puerto Rico Oversight, Management, and Economic Stability Act.”
In related news, the island’s sole representative in Congress has seen his family wealth swell, thanks in part to Wall Street companies that have sought to capitalize on the island’s financial crisis and have hired his wife to advise them, the New York Times DealBook blog reported yesterday. The dual roles — those of a lawmaker and a spouse who are both involved in the financial affairs of their community — are hardly unusual in Washington, D.C. But legislation that Pedro R. Pierluisi (D), the resident commissioner to Congress from Puerto Rico, has introduced would benefit at least two of the companies that have hired his wife, María Elena Carrión, for financial advice. Carrión set up her own Puerto Rico-based financial advisory firm just 20 days after Pierluisi was elected to Congress in 2008, records show. Separately, a Wall Street hedge fund executive whose firm took part in a $3.5 billion bond sale in 2014 for Puerto Rico, has raised money for Pierluisi’s race for governor of Puerto Rico, campaign finance records and emails show. In separate interviews, both Pierluisi and Carrión said they kept their professional careers separate, and that nothing that Pierluisi had done in Congress had in any way been intended to benefit his wife’s start-up company, Multicultural Capital, or his bid for governor. House ethics rules place no limits on the work that a spouse of a lawmaker can do. Two ethics lawyers who examined the matter at the request of the Times said that they saw no violation of the rules based on the work that Carrión has done. Read more.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
