Friday, February 3, 2023

Puerto Rico in the Spotlight Again

By on February 4, 2016

“Just when I thought I was out, they pull me back in,” the famous line by Al Pacino in the role of Michael Corleone of
the Godfather trilogy would have been a fitting statement for U.S. Rep. Don Young (R-Alaska), as he kicked off a hearing by the House Subcommittee on Indian, Insular & Alaska Native Affairs on Tuesday about establishing a federal fiscal control board for Puerto Rico.

Young was at the center of Puerto Rico’s status debate in 1998 when then-Gov. Pedro Rosselló was determined to hold a federally mandated status plebiscite, which passed by one vote in the U.S. House of Representatives, but fell short in the U.S. Senate. The Rosselló administration aggressively lobbied Congress, but managed only to obtain a perfunctory resolution supporting Puerto Rico’s right to host nonbinding advisory referendums. It was a Steve Harvey moment—“I’m sorry, but the winner really is….”

Now Young is back in the Puerto Rico maelstrom, attempting to ascertain whether the island deserves to handle its own affairs or needs oversight imposed from afar. At this writing, Caribbean Business learned that the hearings’ witnesses included Anthony Williams, the former mayor of Washington, D.C., who was the city’s CFO when Congress established a fiscal control board for D.C. in the late 1990s; Carlos García, former Government Development Bank president during the Luis Fortuño administration; Simon Johnson, an economics professor at the Massachusetts Institute of Technology; and attorney Thomas Moers, partner at New York-based Kramer Levin, which represents two bondholder groups challenging the Debt Compliance & Recovery Act. Puerto Rico’s locally enacted bankruptcy law is before the U.S. Supreme Court, which will hold a hearing this spring on the enforceability of the law.

If the Supremes decide on Puerto Rico’s behalf that the law is enforceable, it would provide the island with access to orderly debt restructuring for much of its $70 billion debt. In truth, a decision favoring the so-called criollo bankruptcy code would prompt a huge sigh of relief in the Republican House majority because there is an immovable fundamentalist faction in the lower chamber that would rather have us shouldering the burden than grant Puerto Rico relief. Just ask their constituents in Arkansas, Mississippi and Alabama.

The latest congressional hearing on the need to establish “a Puerto Rico Financial Stability and Economic Growth Authority,” marks the seventh time since 2015 that a congressional committee has publicly discussed issues related to the island’s fiscal and economic crisis. This is epic foot dragging in a body prone to moving at a glacial pace.

Resident Commissioner Pedro Pierluisi is hopeful that Congress will file a measure to address Puerto Rico’s fiscal and economic woes following the Feb. 2 hearing. The island’s nonvoting member of Congress is adamant that federal oversight must be paired with access to a debt-restructuring regime. And Santa Claus lives in Plaza Las Américas. I am willing to bet that Puerto Rico will not receive a path to orderly relief in Congress—not during an election year and not in the House.

By the time this newspaper prints, Young will have chaired the hearings and members of Congress will be back on the campaign trail. With the exception of those who represent constituents in Hispanic American electoral bastions, few seeking re-election will focus on Puerto Rico’s woes. In the face of that reality, what is the likelihood that House Speaker Paul Ryan (R-Wis.) will find a “responsible solution” to Puerto Rico’s crisis by the end of March?

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