US House passes bill to help Puerto Rico restructure debt

The U.S. House has passed a bill that creates a federal control board to work with investors on restructuring Puerto Rico's $70 billion debt, according to a Reuters report.

The bill, called the Puerto Rico Oversight, Management and Economic Stability Act, was approved Thursday by a vote of 297-127. It will now move to the Senate for consideration.

In a statement, the White House commended the House for passing the legislation.

"While the legislation is not perfect, it is an important first step to addressing Puerto Rico's challenges," the White House said. "The bill helps to protect the 3.5 million Americans living in Puerto Rico from further reductions in critical public services while giving Puerto Rico the tools it needs to restructure its debt."  

The White House also urged the Senate to "act expeditiously to review and vote on this measure," so President Barack Obama can sign the bill into law ahead of the looming July 1 deadline for Puerto Rico to make a $1.9 billion debt payment.

Still, some lawmakers were concerned that allowing Puerto Rico to restructure its debt in a way that changes the seniority of the creditors — for instance by making them all equal or subordinated to pensioners — would set a bad precedent for other U.S. states with debt problems, according to the report.

News of the bill comes as Puerto Rico has a 45 percent poverty rate amid high unemployment, and is plagued by a growing migration of residents to the U.S. mainland, Reuters notes.

Earlier this week, Puerto Rico's only active air ambulance company confirmed it will no longer provide emergency transport services to patients in the territory, as it is owed millions of dollars in reimbursement from government agencies.

 

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