WASHINGTON (Reuters) - House Republicans' rescue plan to help Puerto Rico shed crippling debt has problems and could hurt residents of the U.S. commonwealth, House Democratic Leader Nancy Pelosi said, adding that the proposed legislation is "fixable."
Leading House Republicans on Tuesday outlined their plan, which would steer creditors and holders of Puerto Rico bonds toward a new, independent board that would seek a fair way to write down an estimated $70 billion in debt.
In a statement released late Tuesday, Pelosi said the Republicans' proposal needs changes "to improve the makeup and scope of the board and streamline the restructuring process to make it more workable."
Pelosi said Democrats are concerned "about the negative impact of the legislation on working people in Puerto Rico, as well as the effects of transferring federal lands on Vieques without providing for strong conservation protections."
But, she added, Democrats are working with Republicans on the legislation. "The problems in the bill are fixable and we hope they will be remedied very soon," she said.
On Wednesday, the House Natural Resources Committee will begin work to amend its proposal before voting on the measure. If it passes, the bill would go to the full chamber for a vote.
Many investors would face a loss under the plan and are lobbying members of Congress in a bid to protect their bottom lines.
The rescue plan also adopts some principles of bankruptcy law, and some lawmakers have balked at the idea of letting Puerto Rico modify its bonds, saying it would create chaos for municipal markets.
U.S. House Speaker Paul Ryan said on Tuesday he supported the measure. He will need to win over fiscally conservative Republicans, and likely some Democrats, to get the bill through the chamber.
(Reporting by Susan Heavey and Richard Cowan; Editing by Jeffrey Benkoe)