House Committee Approves Puerto Rico Bill
May 25 2016 - 2:20PM
Dow Jones News
A House committee advanced legislation to address Puerto Rico's
debt crisis with solid bipartisan support, a strong sign the bill
could now advance quickly through Congress ahead of a potential
default by the territory on July 1.
The legislation would create a debt-restructuring process and
empower a federal oversight board to supervise what is shaping up
to be the largest municipal debt workout in American history. It
wouldn't spend any federal money.
The House Committee on Natural Resources, which has oversight of
federal territories, advanced the bill on a 29-10 vote. The bill,
which produced a rare moment of bipartisan cooperation in an
election year, has drawn strong opposition from some bondholders
and other political groups that spent millions of dollars on
television advertisements to defeat it.
Puerto Rico has begun defaulting on several classes of nearly
$70 billion in debt it owes, threatening to worsen the island's
growth prospects after a decadelong recession. Because it isn't a
state, its municipalities aren't eligible to restructure their
debts in U.S. bankruptcy courts, and because it isn't a country,
Puerto Rico can't turn to the International Monetary Fund for
assistance.
Rep. Rob Bishop (R., Utah), the committee chair, said he expects
majorities of both parties to back the bill when it comes to the
House floor. Senate Republicans have indicated that it will advance
quickly in that chamber. "We're anxious to take up whatever they
can pass," said Senate Majority Leader Mitch McConnell (R., Ky.) on
Tuesday.
The White House supports the measure.
The bill would be a significant policy accomplishment for House
Speaker Paul Ryan (R., Wis.), who tasked Mr. Bishop with crafting
legislation earlier this year to create a pathway for the island to
write down certain debts while subject to the federal board. They
worked closely with the Treasury Department and Democratic
lawmakers to refine legislation both sides said was an unusually
collegial and bipartisan process.
Some conservative lawmakers objected to the bill because they
said it would harm creditors' rights and create a potential
precedent for distressed U.S. states. Labor unions, some
progressives, and Puerto Rican officials have objected to other
provisions. They say the oversight board amounts to a colonial
takeover.
House Minority Leader Nancy Pelosi (D., Calif.) and Rep. Pedro
Pierluisi, a Democrat who serves as Puerto Rico's nonvoting
representative, have supported the bill, saying it is the best
package they can secure under a Republican-controlled Congress.
Lawmakers should "get real" about any alternatives "that can
actually become law," said Mr. Pierluisi. "I do not believe one
exists."
Siobhan Hughes contributed to this article.
Write to Nick Timiraos at nick.timiraos@wsj.com
(END) Dow Jones Newswires
May 25, 2016 14:05 ET (18:05 GMT)
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