Sunday, February 5, 2023

U.S. Treasury Secretary Asks Congress for Immediate Action

By on March 31, 2016

U.S. Treasury Secretary Jacob J. Lew has called once again on Congress to act immediately to help Puerto Rico out of its fiscal crisis. “There is an immediate crisis in Puerto Rico; it is not a future crisis. For all practical purposes, they are in default because they are not paying some of their bond issues. They have large payments due in May and July, and we do not see a way they can make those payments. The need for action is immediate,” said Lew during his speech last week before the U.S. House of Representatives’ Financial Services Committee.

U.S. Treasury Secretary Jacob J. Lew

U.S. Treasury Secretary Jacob J. Lew

“I think the work is being done—I have not seen the product of the work done by the [U.S. House] Natural Resources Committee—but the work being done is very important and it is very time sensitive,” Lew said, adding that the legislation presented must include a supervisory authority and the possibility of restructuring Puerto Rico’s $70 billion debt in its entirety. Lew believes that even general-obligation debt should at least be restructured and he is against a single solution for all the island’s debts.

The Treasury secretary does not believe that Puerto Rico’s debt problems will affect other municipal bonds and quoted three analysts who have presented studies that support this view. Each bond issue is considered independently.

“I think the worst thing that could happen to the municipal bond market would be a disorderly restructuring taking place in Puerto Rico, which is what will happen if Congress takes no action,” he said.

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