Velazquez Leads Latino Members in Calling for Treasury Assistance for Puerto Rico

Washington, DC – Rep. Nydia M. Velázquez (D-NY) led seven other Latino Members of Congress today in calling for the U.S. Department of Treasury to take a more active role in assisting Puerto Rico during the Commonwealth's financial crisis. In a letter to Treasury Secretary Lew, the lawmakers asked that Treasury engage with the Chairs of the House and Senate Judiciary Committees to push for passage of legislation extending Chapter 9 bankruptcy protections to Puerto Rico.

"Puerto Rico should be afforded the same Chapter 9 protections that any state can utilize and it is my hope that Treasury joins us in working with Congress toward that commonsense goal," Velázquez said.

In addition, the letter calls for Treasury to actively work with creditors of Puerto Rico to achieve an orderly process for resolution of Puerto Rico's debt.
"The Department of Treasury was instrumental to helping the auto manufacturers weather tough times and stabilizing Wall Street during the 2008 crisis," Velázquez added. "There's no reason they can't play a similar role here by sitting down with institutions holding large amounts Puerto Rico's debt and encouraging them to develop a reasonable solution, rather than trying to profit from Commonwealth's problems."

The letter was also 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 full text of the letter is below.
September 14, 2015

The Honorable Jacob Lew
Secretary
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220

Dear Mr. Secretary:

We are writing to express our deep concerns regarding the growing economic crisis in Puerto Rico and to urge the Department of Treasury to take concrete, constructive, and timely steps to help stabilize the situation. As you know, the island has $73 billion in outstanding debt obligations and recently defaulted on a $58 million bond payment. We are concerned this dire situation could quickly escalate, further reducing the island's access to capital markets and leaving investors and institutions with significant losses. To prevent such an economic catastrophe, we recommend that the Department of Treasury move beyond its provision of technical assistance and take a leadership role to bring creditors and debtors to the table to resolve this crisis immediately, as it did in the financial crisis of 2008.

We concur with the recent letter sent by Assistant Secretary Anne Wall of the Department of Treasury to Congressional Hispanic Caucus member, Representative Nydia M. Velázquez, asserting that Puerto Rico "needs an orderly process to address its liabilities." In this regard, we strongly support the extension of Chapter 9 of the U.S. Bankruptcy Code to Puerto Rico, which could alleviate the debt issued by Puerto Rico's insolvent public enterprises. We ask that you meaningfully engage with Chairman Goodlatte of the House Judiciary Committee and Chairman Grassley of the Senate Judiciary Committee to advance this critical legislation (H.R. 870 and S. 1774). At the same time, 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.

Without such intervention, it is increasingly likely that the situation will resolve itself in a more disorderly and costly manner. As Assistant Secretary Wall further stated in her recent letter, "[u]nder the status quo, without a tested legal regime in place, a resolution of Puerto Rico's financial obligations would likely be chaotic, protracted, and costly both for Puerto Rico and more broadly for the United States." We fully agree with this sentiment and believe that absent such a legal regime, intervention by the Department of Treasury provides the best opportunity for an orderly resolution to the island's non-public utility debt obligations.

The world is watching Puerto Rico and we must ensure that the United States does everything within its power to take substantive actions to resolve this crisis. While we appreciate the technical assistance and informal advice the Department of Treasury is providing to the government of Puerto Rico, we believe the time has come to take stronger actions. Alleviation of Puerto Rico's mounting fiscal crisis will require active engagement by the Department of Treasury and congressional approval of the pending Chapter 9 bankruptcy legislation. This is our best hope, not just for Puerto Rico and its 3.5 million American citizens, but for U.S. economic interests on the mainland as well.

We look forward to your prompt response on this matter.
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