Representative Nydia M. Velázquez (D-NY) and seven other Members of Congress have sent a letter to Treasury Secretary Jacob Lew requesting the Department to move beyond its provision of technical assistance in helping Puerto Rico and to take a greater leadership role to bring creditors and debtors to the table to resolve the U.S. territory’s fiscal crisis. “This situation is unprecedented,” according to the letter, “and therefore requires an unprecedented approach.”
“Public utilities in Puerto Rico cannot resolve their debts through Chapter 9 of the U.S. Bankruptcy Code, as public utilities located in U.S. states are able to do,” Velázquez and her colleagues explain. “As a territory of the U.S., it is not a sovereign nation, which bars it from seeking assistance through the International Monetary Fund (IMF). Such a reality means that the island is in an exceptionally rare predicament – one in which conventional legal options are not an option, nor are more traditional lines of international aid.”
Velázquez and her colleagues express strong support the extension of Chapter 9 of the U.S. Bankruptcy Code to Puerto Rico and request that Lew engage with House Judiciary Committee Chairman Bob Goodlatte (R-VA) and Senate Judiciary Committee Chairman Chuck Grassley (R-IA) to advance legislation (H.R. 870 and S. 1774) to provide the U.S. territory with equal rights and opportunities possessed by states in the federal bankruptcy code. “At the same time,” the letter notes, “other mechanisms must be pursued to address the island’s remaining outstanding debt. We believe the Department of Treasury is uniquely positioned to promote a fair and efficient outcome.”
The letter was signed by Senator Robert Menendez (D-NJ) and Reps. José E. Serrano (D-NY); Tony Cárdenas (D-CA); Rubén Hinojosa (D-TX); Raúl Grijalva (D-AZ); Albio Sires (D-NJ); Grace F. Napolitano (D-CA).
The Velazquez letter follows a letter sent to Secretary Lew in July by Senate Finance Committee Chairman Orrin Hatch (R-UT) seeking the position on the Obama administration on various policy proposals that have been recommended as ways to help Puerto Rico. In his response, Secretary Lew endorses allowing Puerto Rico to resolve its liabilities under the supervision of a bankruptcy court, which he explains would not involve federal financial assistance and “is in no way a federal bailout.”
On June 24, 2015 the House Subcommittee on Indian, Insular and Alaska Native Affairs held a hearing to examine Puerto Rico’s political status and economic outlook.