Senate Democrats Urge Debt Restructuring for Puerto Rico
Jan. 27, 2016 (EIRNS)—Speaking from the Senate floor yesterday, Minority leader Harry Reid (D-Nev.) announced that the entire bloc of Senate Democrats had signed a letter to Majority leader Mitch McConnell (R-Ky.), urging bipartisan cooperation to pass legislation that will address Puerto Rico’s desperate economic and humanitarian crisis.
Two days before Puerto Rico’s government advisers will sit down with bondholder representatives and present the Commonwealth’s restructuring proposal for its $72 billion in debt, 44 Democrats and two Independents called on Republicans to finally address the deepening crisis affecting 3.5 million American citizens on the island, noting the devastating effect of Congress having failed to do so in the 2016 Omnibus Appropriations Bill.
A responsible solution, the letter reads, "must allow Puerto Rico to restructure a meaningful portion of its debt," although it stipulates the end of March timeframe set by House Speaker Paul Ryan as the deadline for producing a plan for the island. This is far too late to respond to a crisis which the letter admits is of a "catastrophic" nature. Gov. Alejandro Garcia Padilla has already indicated that a number of payments due between now and July cannot be made, and two bond insurers have filed legal suits against the Governor and several top officials. Litigation could become a costly nightmare for everyone involved.
Up until 1984, when Congress "inexplicably excluded it," Puerto Rico was included in Chapter 9 of the U.S. Bankruptcy Code, the letter notes. "We urge you to commit to working with us to swiftly enact legislation to give Puerto Rico access to appropriate restructuring tools." Reid himself had argued from the floor that any solution that doesn’t grant the Commonwealth the ability to restructure its debt "would be an abject failure."