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Former Senator Bob Dole Endorses Chapter 9 Bankruptcy Access in Puerto Rico

Former Senator Bob Dole has endorsed legislation authorizing Puerto Rican municipalities to access federal bankruptcy restructuring options  that are already available to states under Chapter 9 of the Federal Bankruptcy Code.

The former presidential candidate (1996) and longest serving Republican U.S. Senate Majority Leader expressed his views in a letter to Bob Goodlatte, the chair of the House Committee on the Judiciary.

“I write as a volunteer who supports,” said Dole, “the Puerto Rico Chapter 9 Uniformity Act of 2015.”

“Congress has empowered the government of Kansas, Virginia, and every other U.S. state to allow — or not allow — their municipalities to utilize chapter 9,” Dole continued. “There is no good reason why Congress should not empower the government of Puerto Rico to do the same.”

In his letter, Dole explains that he was in the Senate when Congress excluded Puerto Rico from Chapter 9 in 1984, and points out that Congress reserved the power to remove that exclusion. “Congress should exercise that power now,” he said. He further describes the passage of HR 870 as a “simple, fiscally conservative step to help Puerto Rico — a U.S. jurisdiction that is home to 3.5 million of our fellow American citizens.”

Dole’s letter follows on the heels of an article written by Ike Brannon, a former a U.S. Treasury official and now a Growth Fellow of the George W. Bush Institute, published in the The Weekly Standard, in which Brannon pushes back on misconceptions about the federal bankruptcy process and its possible role in preventing a federal bailout.

As Brannon explains, “[t]he notion that it would cost the federal government money if Puerto Rico’s municipal corporations were permitted to restructure their debts under Chapter 9 woefully misconstrues both Puerto Rico’s current situation as well as how a Chapter 9 proceeding actually works. Absent some sort of restructuring under Chapter 9, Puerto Rico’s situation may keep deteriorating until a federal role—along with a potential federal bailout—becomes necessary.”

“Denying Puerto Rico the option of Chapter 9 under the guise of fiscal conservatism simply makes no sense,” Brannon writes. “There is no reason to think that an orderly restructuring would cost the federal government any money: The reality is that the longer we allow the island’s debt situation to metastasize, the more likely it is that the feds will end up on the hook.”

3 thoughts on “Former Senator Bob Dole Endorses Chapter 9 Bankruptcy Access in Puerto Rico”

  1. Yet granting the unincorporated territory statehood powers EFFECTIVELY UPGRADES IT TO “ENHANCED COMMONWEALTH” for chapter 9 purposes.

    Why do you think the “commonweath ” party jumped right in to support HR 870?

    Treating PR “like a state”without statehood is ENHANCED COMMONWEALTH.


  2. I agree that it creates a dangerous precedent from a constitutional standpoint.

    However, passing this legislation would also help bolster the argument that Puerto Rico is really an incorporated territory which would be a major step towards statehood. Though I admit it seems like the PPD (the governing board at least) is moving increasingly closer and closer to supporting something along the lines of incorporated territory.

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