US Treasury Secretary Lew Arrives in San Juan
SAN JUAN – U.S. Treasury Secretary Jacob J. Lew arrived in San Juan Monday as part of the Obama administration’s engagement with the island regarding its fiscal crisis.
Lew will visit Eleanor Roosevelt Elementary School and Centro Médico de Puerto Rico. While in San Juan, he will also meet with officials from the Puerto Rican government along with business and community leaders.
Lew is expected to highlight how the debt crisis “has already harmed the health, safety, and welfare” of people living in Puerto Rico, reads the media advisory on his visit.
He will also “reiterate his call for Congressional action that provides Puerto Rico with access to an orderly restructuring regime and independent oversight while respecting the commonwealth’s self-governance.”
Lew last visited the island early this year, also urging for prompt Congressional action over the matter. He added at the time that the commonwealth was “already in default,” with a crisis that was imposing “a real hardship on the people of Puerto Rico.”
The House Natural Resources Committee is not expected to hold a markup hearing on the Puerto Rico Oversight, Management & Economic Stability Act (Promesa) — a bill that would establish strong, independent fiscal oversight board that would also control the commonwealth’s access to a debt-restructuring mechanism — until at least mid-May. Concerns remain over the proposed legislation’s passage, as it keeps struggling to achieve enough support from both sides of the aisle.
A day after Puerto Rico defaulted on roughly $370 million due on Government Development Bank debt due May 2, Lew urged once again for prompt congressional action, stating that “the crisis is real,” and is quickly approaching a complete unwinding that could increase the risk of spilling over to the rest of the municipal bond market.
During an event held Tuesday by the Milken Institute, the U.S. Treasury secretary said Promesa is not a bailout, but warned that if it gets to a point where “there is nothing to restructure,” a federal bailout could be possible to avoid further chaos.
By listing the wide range of hardships he says the island has been facing lately as it maneuvers through its fiscal and economic woes, Lew conceded it is a challenge having Congress members act fast enough before the crisis goes up a couple of notches this summer, when more than $1.5 billion in debt payments hit.
Earlier this week, the Treasury secretary wrote to Congress leaders, warning that further inaction only gives oppositors to the Puerto Rico bill more time to continue making inaccurate and misleading claims about the proposed legislation.
“I believe there are [some creditors] who want to maximize their chance of getting a dollar on the dollar, even if everyone else gets nothing and even if the whole system collapses,” Lew said during Tuesday’s event, noting that is why a restructuring mechanism is necessary.
He stressed that this mechanism can’t be one that requires all creditors to buy in, warning about having holdout creditors dragging the process for years. “If this goes into litigation and the different classes of bondholders are fighting in court for 10 to 15 years, there won’t be anything left of Puerto Rico.”