House GOP releases legislation to reverse Puerto Rico's debt

AP News
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Posted: Apr 12, 2016 7:00 PM

WASHINGTON (AP) — Seeking to reverse Puerto Rico's spiraling economy, House Republicans on Tuesday released compromise legislation to create a tough new financial control board for the territory.

Puerto Rico is struggling with $70 billion in debt, and its governor has said the territory is battling a humanitarian crisis. The legislation would create a seven-member board that would put financial plans in place but still allow the island's government to have some say in the process.

Democrats had rejected a previous draft of the bill, saying the board was too powerful under a previous draft. Republicans said Tuesday they are aiming to avoid a "colonialist" approach

The compromise bill would allow the board to oversee some court-supervised debt restructuring. But in an attempt to mollify conservatives, the legislation would give creditors more of a say.

House Speaker Paul Ryan, R-Wis., endorsed the bill, saying Congress has a constitutional responsibility "to bring order to the chaos" in Puerto Rico.

Ryan said the legislation "holds the right people accountable for the crisis, shrinks the size of government, and authorizes an independent board to help get Puerto Rico on a path to fiscal health. Just as important for the long term, this bill protects American taxpayers from bailing out Puerto Rico."

The previous draft released by House Natural Resources Committee Chairman Rob Bishop, R-Utah, drew opposition from Puerto Rican officials, Democrats and some conservatives. In a summary of the bill, the committee said they tweaked the earlier draft "to address concerns that it was too colonialist, while still being able to achieve intended goals."

The legislation would not give Puerto Rico the broad bankruptcy authority it has asked for, but would allow the oversight board to decide whether debt restructuring is necessary. If the board decides it is needed in some areas and certain conditions are met, it could facilitate court-supervised debt restructuring.

The House Republican Study Committee, a group of around 170 conservatives, had expressed concerns about the debt restructuring provisions, throwing the bill's future in doubt. Republican Rep. Bill Flores of Texas, head of that group, said Tuesday that they are still reviewing the new version of the legislation, "but we are encouraged that there appear to be some improvements."

A spokesman for House Democratic Leader Nancy Pelosi said she is still examining the legislation. Pelosi had rejected the previous version, saying it would exert "undue and undemocratic control" over the territory.

Puerto Rico has been mired in economic stagnation for nearly a decade. The territory's financial problems grew worse as a result of setbacks in the wider U.S. economy, and government spending in Puerto Rico continued unchecked as borrowing covered increasing deficits.

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