A bill to help Puerto Rico manage its debt crisis cleared the House of Representatives on Thursday, but faces some resistance as it heads to the Senate.
The legislation, passed on a vote of 297 to 127, would create a seven-member board to manage restructuring of the U.S. territory’s $70 billion of debt and oversee the island’s finances. Puerto Rico faces payments of $2 billion on July 1 and defaulted on a payment of about $400 million in May.
Puerto Rico’s Dire Financial Trouble Explained
After Puerto Rico missed a debt payment on May 2, the White House called on Congress to step in and help the U.S. territory avoid financial disaster. How did the island get into this situation? WSJ’s Jason Bellini has #TheShortAnswer. Photo: Erika P. Rodriguez/Bloomberg (Originally published May 2)
The bill passed with bipartisan support in the House. Senate Majority Leader Mitch McConnell, a Kentucky Republican, has said the Senate will take up the bill after the House votes, but hasn’t offered a timetable.
The Senate’s No. 2 Republican, John Cornyn of Texas, said if Congress doesn’t act there will be a demand for a taxpayer bailout. He called the bill “the only alternative I know of”. The House bill would not spend any federal money.
Critics may throw up roadblocks and, at minimum, slow the legislation down. Senators including Bernie Sanders — who is still officially challenging Hillary Clinton for the Democratic presidential nomination — and Bob Menendez oppose the bill. Menendez, a New Jersey Democrat, and Vermont’s Sanders have both criticized the control board and the bill’s lowering of the minimum wage for younger workers.
An amendment to the bill offered by Reps. Garrett Graves, a Louisiana Republican, and Don Beyer, a Virginia Democrat, would allow the control board to probe any underrepresentation of risks for investors in Puerto Rican bonds. Any conflicts of interest by advisers or brokers could also be investigated by the board.