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Senate President: Amendments to Moratorium Law Will be Evaluated Openly

By on April 19, 2016

SAN JUAN – Senate President Eduardo Bhatia announced Tuesday that the House amendments to the law that would allow the governor to declare a moratorium on debt payments will be evaluated by advisers and discussed in the majority caucus, but did not provide assurances the upper chamber would give them the green light.

Senate President Eduardo Bhatia

Senate President Eduardo Bhatia

In a statement, Bhatia said, “[On Monday] the House gave way to two amendments to Act 21 of 2016. Both measures will be evaluated by a team of Senate technical advisers and will be discussed by the Popular Democratic Party majority caucus. I am reiterating my commitment to openness and transparency in this legislative evaluation. As soon as there is a consensus with regard to these amendments or any other measure that can help us face the country’s fiscal challenges, we will be notifying it.”

He added that “our guiding principle remains preventing that basic services to citizens be affected, while at the same time we take care of the fiscal situation the country is facing.”

On Monday night, the House passed a bill that would exclude general obligation (GO) and Sales Tax Financing Corp. (Cofina by its Spanish acronym) bonds from the law that allows the governor to declare a debt moratorium.

House Bill 2864 was passed to exclude from the proposed debt moratorium “all bonds and notes outstanding or to be issued that are guaranteed by the full faith and credit of the Commonwealth of Puerto Rico and all bonds and notes outstanding or to be issued that are guaranteed by the securitization of certain revenues of the issuer under a Trust Agreement established for those purposes are excluded from all the provisions set forth herein.” The legislation also protects deposits from the island’s 78 municipalities.

In addition, the House passed another measure, H.B. 2866, which seeks to preserve the stability of local cooperatives, or savings & loans, by adopting some of the dispositions in the Dodd-Frank Wall Street Reform and Consumer Protection Act, which brought about substantial changes to federal financial regulation after the Great Recession. The bill would ensure that deposits by cooperatives be paid first should the Government Development Bank be put into receivership, in an effort to protect their deposits.

Sources in the Senate, however, noted that there not enough votes to pass the bill that excludes GOs and other debt from the moratorium. Gov. Alejandro García Padilla has threatened to veto the bill.

Senators on Tuesday appeared to be more lukewarm to the amendment that would help avoid a collapse of the cooperative banking sector.

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