Last week, the House introduced H.R. 5278, the “Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which protects taxpayers and addresses Puerto Rico’s fiscal crisis. Take a look at these op-eds and editorial boards supporting PROMESA:
Kenneth Klee, renowned bankruptcy law expert: “PROMESA puts no taxpayer money at risk. Yet the proposal’s critics (a shadowy cast of powerful hedge funds) are cynically referring to it as a bailout so they can profit handsomely from an actual taxpayer bailout down the road, once the situation in Puerto Rico spins further out of control. . . . Congress should not be taken in by this ruse and should instead consider PROMESA on its merits. If it does so, the legislation will pass and Puerto Rico – and the rest of the United States – will be better off as a result.” (The Hill)
Greg Bell, former Utah lieutenant governor: “With a new draft of House Committee on Natural Resources Chairman Rob Bishop's bill to resolve the crisis about to be released, there has been a barrage of ads opposing the bill as a taxpayer bailout of Puerto Rico. The ads assert or imply that Bishop is undermining Social Security and that the federal government will bail out Puerto Rico with taxpayer funds or that debt re-structuring would be done on the backs of small bondholders. The truth is precisely the opposite: Unless Congressional action is taken now to restructure Puerto Rico's massive $70 billion-plus debt, it is all but guaranteed that much more dramatic and costly federal intervention will be required when a full-blown economic and humanitarian crisis hits the island in the wake of a full default.” (Salt Lake Tribune)
PROMESA sponsors Natural Resources Committee Chairman Bishop and Rep. Duffy: “Deceitful attack ads from dark-money special-interest groups have surfaced in recent weeks calling previous drafts of the bill a ‘bailout.’ These claims are false and ignore the basic federalist and constitutional principles that are the foundation of the legislation. To the contrary, PROMESA prevents taxpayers from being on the hook for Puerto Rico’s irresponsible behavior and it does so within a constitutional framework that will provide real, long-lasting reform for Puerto Rico. The bill also respects the priority of legal claims and rejects outright an amendment to Chapter 9 of the Bankruptcy Code from which the territories were expressly excluded.” (National Review)
Washington Post editorial board: [T]he bill actually preserves existing lawful priorities and leaves it up to the board to grant any adjustments, subject to court review. To be sure, this basically relocates the same squabble among creditors that had been playing out in Washington; now the referee will be an impartial panel of experts armed with a reliable audit of the island’s obligations." (Washington Post)
Wall Street Journal editorial board: “[t]he Republican Congress is using conservative principles to solve an urgent problem caused by progressive government. With some fortitude and a little luck, the Commonwealth of Puerto Rico might even be able to grow again. House Republicans this week plan to mark up a revised bill to let Puerto Rico restructure its $72 billion debt under the supervision of a federal oversight board. Puerto Rico needs Congress’s help to prevent a creditor brawl when the island’s debt issuers inevitably default, as well as to arrest a decades-long recession and population exodus.” (Wall Street Journal)
Here’s the latest news that, once again, affirms that PROMESA is not a bailout, and actually protects taxpayers from a bailout.
“Rep. Raúl Labrador (R-Idaho), a Puerto Rico native who serves on the Natural Resources panel, successfully inserted a firewall between payments to bondholders and pensioners. Payments to bondholders are guaranteed by the Puerto Rican Constitution, and the new language ensures pension payments cannot be prioritized. Ryan and his leadership team ‘have been working closely with me. They’ve done a great job of making sure that all the concerns that I had about the bill have been addressed,’ Labrador said.”(The Hill)
"[T]he latest round in a lobbying and public advocacy effort that has drawn ire from both sides of the aisle in Congress. It follows a targeted ad campaign that has spent millions to stop the bill by labeling it a bailout, a loaded word ever since the public uproar over the bank and auto rescues in the 2008 financial crisis. No federal taxpayer funding goes toward paying Puerto Rico's debt." (Politico)
“Under the new law, the fiscal oversight board could override any act or law by the Puerto Rican government that it deems to violate PROMESA. It can also force the government to sell assets, merge agencies and lay off government employees. The board would have the power to hold hearings, subpoena witnesses, demand information and audited financial statements from the government. It would also be allowed to impose criminal penalties for providing false information or violating the board’s orders.” (The Hill)
"The latest version of the PROMESA bill adds more protections for the island's creditors. There is now language explicitly stating that any adjustments of debt must be 'in the best interests of creditors.'" (CNN)
"Creditors could benefit from some of the latest changes to the bill because the board and a court would have to approve a restructuring that honors existing rights and remedies of Puerto Rico’s various bonds. . . . The bill also protects any existing, voluntary restructuring agreements between a commonwealth agency and its creditors." (Bloomberg)
Related:
1. Statement on Puerto Rico Legislation
2. Puerto Rico Default Underlines Need to Prevent Bailout, Pass PROMESA
2. “There will be no taxpayer bailout of Puerto Rico”
3. Conservative Groups Back Puerto Rico Bill
4. Puerto Rico: “Progress, not a bailout”
5. VERIFIED: House Bill Protects Taxpayers From Bailout, Requires Tough Choices From Puerto Rico
6. Statement on Puerto Rico Legislation