Senate Passes Bill To Help Puerto Rico Restructure Debt
Puerto Rico has $70 billion in debt. The measure passed by the Senate sets up a fiscal control board for the island, and helps it avoid defaulting on a critical $2 billion debt payment due Friday.
DAVID GREENE, HOST:
All right. After months of uncertainty over its fiscal crisis, Puerto Rico is receiving some help from Washington. President Obama is expected to sign a bill that would help the island restructure and repay more than $70 billion in government debt. Here's NPR's Greg Allen.
GREG ALLEN, BYLINE: It was a year ago that Puerto Rico's governor, Alejandro Garcia Padilla, made a stunning announcement. The U.S. territory, he said, was running out of cash and would not be able to repay its crushing debt. For most of the past decade, the U.S. territory has been mired in a recession. A series of administrations covered budget deficits by issuing bonds, essentially taking out loans from Wall Street. With its economy in shambles and tens of thousands of people leaving the island each year, Governor Garcia said Puerto Rico couldn't satisfy its lenders and maintain essential services like schools, police and hospitals. Yesterday, Senate Majority Leader Mitch McConnell agreed and said it's critical that Congress step in.
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MITCH MCCONNELL: This bill won't cost taxpayers a dime - not a dime. What it will do is help Puerto Rico restructure its financial obligations and provide much needed oversight to put in place needed reforms.
ALLEN: The bill, which was written by Republican leaders and already passed in the House, sets up a seven-member fiscal oversight board, similar to bodies established in earlier decades when Washington, D.C., and New York City faced insolvency. The oversight board will take charge of Puerto Rico's budget, negotiate with creditors and have the authority to restructure some of the island's debt. The measure also puts a hold on creditor lawsuits. That's important because Puerto Rico is just two days away from defaulting on a $2 billion debt payment, and lawsuits were expected.
Senator Bernie Sanders was one of the Democrats who fought to kill the bill and the oversight board because, in his words, the U.S. should not treat Puerto Rico as a colony.
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BERNIE SANDERS: This legislation strips away the most important powers of the democratically elected officials of Puerto Rico, the governor, the legislature and the municipal governments as well. We must not allow that to happen.
ALLEN: Treasury Secretary Jack Lew commended Congress for passing the bill. And President Obama is expected to quickly sign it. But while it's embraced by the governor and other Puerto Rican officials, it's not popular on the island. One recent poll showed more than two thirds of those in Puerto Rico oppose the measure. Greg Allen, NPR News.
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