Puerto Rico Debt Crisis Jenilee Eder Commonwealth of
Puerto Rico Debt Crisis Jenilee Eder
“Commonwealth” of the United States • Denied access to international organizations • Denied right to voting in presidential election • Non-voting representation in Congress
The Debt - $75 Billion • 12. 6% Unemployment and 45. 4% Live in Poverty • Where Debt Comes from • • • Bonds Held by U. S. Banks and Corporations Pension Funds Bonds Held by Mutual Fund Investors • Public Utility Corporations $20 Billion • Pension Liability $46 Billion
Federal Bankruptcy Code • Chapter 9 • • 1984 Amendment Allows Municipality and State-owned Corporation Bankruptcy • Chapter 11 • Restructuring enforced by the courts
Puerto Rico Recovery Act • Allow municipality bankruptcy • Utility companies could restructure debt
Supreme Court Ruling • Unconstitutional • Conflict Preemption • Cannot Circumvent Chapter 9 Exclusion • Territorial Clause of the Constitution
PROMESA Bill • Oversight Board • Potential to Enforce Restructuring with Bondholders • Lowers Federal Minimum Wage • Not a Bailout • Maintains Stay with Debtors
Shortcomings of the Bill • No Pro-Growth Economic Plans • Does Not Provide Relief on Pension Fund • Costly Court Negotiations • Not a Long Term Solution • Too Late for This Type of Remedy
Future of Puerto Rico • Spiraling Debt • Stuck in Endless Cycle • Shutting Off Utilities: Water and Electricity • Islanders Moving to Mainland
Revising the Federal Bankruptcy Code: Granting Puerto Rico the Ability to Declare Bankruptcy • Similar to Detroit • Quick and Effective • Allow Utilities to Function without Interruption • Still Not a Taxpayer Bailout
Chapter 9 Inclusion of Puerto Rico • Restructuring with Bondholders • Ability to Alleviate Pension Fund Debt • Potential for Pro-Growth Economic Plans • Can Fast Track
- Slides: 11