Puerto Rico rescue bill advances to full House vote
By Patrick Rucker WASHINGTON (Reuters) – U.S. lawmakers on Wednesday backed a plan to help Puerto Rico escape crippling debt and expand the economy, a move that could put a rescue before the House of Representatives within days.
The House Natural Resources Committee endorsed the plan by a 29-10 vote and left intact most provisions endorsed by House Speaker Paul Ryan. The plan would empower a federal oversight board to negotiate with investors and decide what they would recover from the roughly $70 billion they lent the island. Taxpayer money will not be spent in the rescue which would prevent a bailout, Ryan’s office said in a statement on Wednesday. Puerto Rico’s Governor, Alejandro Garcia Padilla praised the bill for elements to help address insolvency, protect essential services and grow the economy. However, he reiterated reservations about the broad power of the oversight board. “Puerto Ricans are Americans and our democratic rights need to be protected, just like those of American citizens living on the mainland, and the oversight provisions do not meet that obligation,” he said in a statement, urging Ryan to amend the bill before it goes to the full House for a vote. Under the plan, investors may not sue Puerto Rico while the oversight board does its work, and all the island’s creditors could face a loss despite recent lobbying from Wall Street interest groups. Among Republicans who voted on Wednesday, more than half endorsed the rescue plan but a vocal minority warned that it would hurt investor demand for municipal bonds and force issuers to offer higher yields. “Taxpayers across the country will have to pay … as markets adjust to this new world,” warned Congressman Tom McClintock of California. The bill, called the Puerto Rico Oversight, Management, and Economic Stability Act, passed without significant changes. Speaker Ryan and Nancy Pelosi, the top Democrat in the House, in separate statements on Wednesday touted bipartisan support for the bill. If that holds, lawmakers may guide the rescue past the Senate to President Barack Obama before $1.9 billion in Puerto Rico debt is due on July 1. Republicans may demand more concessions while some Democrats find the oversight board too punitive. Democrats also want guarantees that the island’s pension system, which has a shortfall of $40 billion, would be protected first. With the House and Senate set to begin a week-long Memorial Day holiday break at the end of this week, debate of the bill by the full House is not expected until sometime in June. (Reporting by Patrick Rucker; Additional reporting by Richard Cowan in Washington; Writing by Daniel Bases; Editing by Frances Kerry and Bernard Orr)