NEW YORK The chairman of the U.S. House of Representatives’ Natural Resources Committee said on Monday legislation to address Puerto Rico’s growing debt and humanitarian crisis will be introduced for discussion on Wednesday, with a committee vote a week later.
Earlier attempts at introducing a bill out of the committee failed to gain enough attention or understanding among lawmakers, prompting its chairman, Rep. Rob Bishop, a Utah Republican, to delay and rework the bill.
The basic premise of installing an independent oversight board to lead the restructuring of the U.S. commonwealth’s credit and work with the local government to develop an economic reform plan remains in place.
“What we are seeing in Puerto Rico is if you push it off, the situation gets worse, the debt gets worse, the humanitarian crisis gets worse. If you don’t want a bailout and you put it off long enough, you probably will be forced into a position of being in a bailout and I’m not going to vote for that,” Bishop said.
Puerto Rico has already defaulted on some of its debt and faces an overall bill of $70 billion it cannot pay. A staggering 45 percent poverty rate and increased migration of citizens to the U.S. mainland drains economic activity.
Bishop said the changes to the bill were relatively small and that the U.S. Treasury has been “marvelous” to work with in developing the plan.
“Obviously the relationship between the Obama administration and this Congress has not been warm and fuzzy. So this is unusual in the amount of help they have given us,” Bishop said, adding: “At the same time I want it finished. I want them to actually sign off and in some of the small areas, I think they have been dragging their feet.”
U.S. Treasury Secretary Jack Lew visited a Puerto Rican school and hospital on Monday where teachers, nurses and doctors described and showed dire conditions due to the lack of funding.
Lew later told reporters he had not seen the latest language in the draft bill, but that the Treasury has provided technical advice. He said it was up to the committee to decide when to release the legislation.
“I hope Congress does not, as it sometimes does, try to find that last possible moment and miss it,” Lew said.
Puerto Rico defaulted on May 1 for a third time on some of its debt, missing a roughly $400 million payment owed by the Government Development Bank, the island’s main fiscal agent.
However, some of the GDB’s major creditors are forgoing lawsuits for at least a month after reaching a tentative restructuring deal with the bank.
“If we don’t get a bill passed, then lawsuits are going to be coming fast and furiously,” Bishop said.
The May 1 default and the nearly $2 billion July 1 debt payments have spurred congressional activity.
“The goal being that everyone eventually gets paid. And who is first in the line is maybe not as important as the fact that at the end of the day everyone has the chance to be treated fairly and will get their investment back,” Bishop said.
Lew, in his remarks, added that the bill will have to take into account many stakeholders, not just bondholders.
“The interests of retirees on the island have to be balanced, not treated necessarily equally, but balanced,” Lew said, adding that television advertisements calling the legislation a bailout “crossed the line and are deceptive.”
Puerto Rico’s government has said it has not asked for a taxpayer-led bailout, nor has one been offered.
While the legislation will include bankruptcy language, it is not a stealthy way around a prohibition for Puerto Rico to use the U.S. bankruptcy code to restructure its debt, Bishop said.
“We are putting this language in the code that deals specifically with the territories. So everything we do has got to have that firewall between that which will have an impact on the states versus what is there in the territory.”
(Reporting By Daniel Bases and Dan Burns; Additional reporting by Nick Brown in San Juan; Editing by Meredith Mazzilli and Dan Grebler)