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The draft bill introduced in the U.S. Congress on Tuesday to steer Puerto Rico through its economic crisis represents a constructive, good-faith effort but could be improved, the White House said on Wednesday. At a daily briefing, White House spokesman Josh Earnest told reporters the bill would benefit from improvements to a mechanism to boost oversight of Puerto Rico's government and by expanding the earned income tax credit. (This story corrects to say improvements to pre-existing mechanism needed, not the bill, in paragraph 2) (Reporting by Roberta Rampton and Susan Heavey; Writing by Megan Cassella; Editing by Dan Grebler) Draft of Puerto Rico legislation could be improved: White House

Puerto Rico’s Government Development Bank, whose regulator says faces a cash shortfall of as much as $1.3 billion in June, will continue to operate on its own -- for now. The bank, which lends to the commonwealth and its municipalities, is insolvent, Puerto Rico’s Commission of Financial Institutions, the bank’s regulator, concluded in its most recent report on the GDB’s finances. That determination allows the island’s Treasury Secretary to ask a court to appoint a receiver to oversee the GDB. It’s a move the administration won’t make at this time, Jesus Manuel Ortiz, a spokesman for Governor Alejandro Garcia Padilla, told reporters Wednesday in San Juan. “We are constantly monitoring the liquidity of the GDB and no receiver will be named in the short term,” Ortiz said. The GDB serves as the commonwealth’s financial adviser and structures municipal-debt sales for the island. The bank’s cash crunch has hampered its ability to lend to the commonwealth and provide short-term funds. T

Puerto Rico won another week to submit a proposed rate fee to the commonwealth’s energy commission, a charge that would repay debt used to restructure about $9 billion owed by its main power utility. Puerto Rico Electric Power Authority creditors agreed to give officials until April 7 to file their petition to create a new customer fee, called a securitization charge, according to a statement from the utility on Wednesday. A December agreement between Prepa, as the utility’s known, bondholders and bond-insurance companies was set to expire unless the energy commission received the rate petition. This is the contract’s fourth extension this year. The restructuring would be the first step in the commonwealth’s plan to reduce its $70 billion debt load after Puerto Rico and its agencies borrowed for years to fill budget shortfalls. The island’s economy has declined in the past decade and it has already defaulted on some agency debt. Prepa faces a $1.13 billion payment to investors and lend

The House Natural Resources Committee released a discussion draft Tuesday evening that would establish an oversight board to assist the Puerto Rican government as it navigates its debt crisis. The 115-page draft, would also establish a Revitalization Coordinator under the oversight board to help move infrastructure projects forward. The coordinator must have knowledge and experience in the planning, pre-development, financing and development of energy infrastructure projects, according to the draft . The coordinator will also have to progress energy projects that will reduce Puerto Rico’s reliance on oil for electric generation; improve energy infrastructure performance and energy efficiency; and promote the development and utilization of Puerto Rico’s energy sources. The inclusion of a means to advance infrastructure solutions comes as  high electricity costs and outdated infrastructure have caused businesses and citizens to migrate from Puerto Rico, according the House Natural Re

Reestructurar la deuda de las corporaciones públicas y buscar alternativas para entablar planes de pago de la deuda constitucional son algunas alternativas que plantearon hoy, miércoles, abogados expertos en el tema durante el Foro Constitucional sobre la Deuda Pública. Durante el evento, el moderador y director ejecutivo de la Asociación de Abogados de Puerto Rico, Ramón L. Rosario Cortés, estableció que “hay serias implicaciones y consecuencias legales de incumplir con el pago de la deuda pública, particularmente la porción de la deuda cobijada por la garantía constitucional”. Destacó que al presente la deuda constitucional es de $1,126 millones y la no constitucional -que se refiere a corporaciones públicas- de $3,343 millones. “Acreedores nos van a demandar por la deuda constitucional porque la Constitución dice que lo primero que se paga es eso. Al final del día, nos van a demandar y el dinero saldrá del Fondo General. Hay otras deudas que se pueden reestructurar que no tienen

A draft of a bill to steer Puerto Rico through its economic crisis would incorporate key elements of U.S. bankruptcy law, a blow to creditors who have long lobbied to keep the island's debt talks out of court. A so-called 'discussion draft' of the bill, circulated by the House Committee on Natural Resources, would include sections of the U.S. Bankruptcy Code that allow bankrupt entities under certain circumstances to force debt cuts on creditors who have not agreed to them. Puerto Rico faces $70 billion in debt, including major bond payments due in coming months. It is also burdened by a near $44 billion unfunded state pension liability. The bill "provides Puerto Rico with tools to impose discipline over its finances, meet its obligations and restore confidence in its institutions," Utah Republican Rob Bishop, the committee's chairman, said. The Republican-led Natural Resources Committee's bill would create a federal board to oversee the island's f

Proposed federal legislation that would help Puerto Rico restructure its $70 billion of debt could lead to full repayment of general obligations, which would be a boon to bondholders and insurers, according to Height Securities. A draft measure by House Republicans that has circulated on Capitol Hill would give a five-member federal control board the authority to oversee a reduction of the island’s debts, instead of entrusting that to local officials, and empower it to sell debt on behalf of the island. With such a structure in place, losses on general obligations would be zero, and sales-tax bonds would be cut just 10 percent, down from earlier estimates of 10 percent and 45 percent, respectively, according to a report released Tuesday by Height, a Washington-based broker dealer. “The key element of the bill is the limitations on debt restructurings, which should protect general obligation and Cofina bondholders,” wrote Edwin Groshans, an analyst who tracks municipal-bond insurers

Puerto Rico is a politician-made disaster area. It has more than $72 billion of debt, an estimated $30 billion shortfall in its state pension fund, two government agencies have already defaulted on debts, and it faces a $2 billion payment on July 1 st . How did the situation get this? Like most governments that spend more than they collect, Puerto Rico issued bonds to cover budgetary shortfalls, and due to the favorable tax status that exempted these bonds from federal, state, and local taxes in all 50 states there was a hefty demand from the investment community. That changed in 1996 when Congress brought and end to favorable tax breaks for U.S. manufacturers operating in Puerto Rico. With a key inducement for those companies no longer in place, they closed down their operations and as any junior economist can tell you the resulting economic slump was written on the walls. Change is difficult and in this situation, Puerto Rico doubled down on government stimulus spending which it h

A first crack at a solution for Puerto Rico's debt crisis was revealed Thursday evening, containing several Republican-backed provisions that could cost Democratic support. The House Natural Resources Committee is expected to release a draft bill sometime next week, but a summary of the legislation first published by   The Wall Street Journal   reveals a bill that adheres to Republicans' preferred solutions for the $70 billion in debt Puerto Rican government officials say they can't pay off. The Republican plan would establish a five-person oversight board to audit the government and gear it toward fiscal solvency. That board would also be charged with determining how much debt restructuring would be necessary, with the option to settle disputes in court as a last resort. The plan would not give Chapter 9 bankruptcy authority to Puerto Rico, which Democrats have insisted be part of any bill to address the crisis. It also contains a stay on lawsuits that the summary says

UBS Group AG's wealth management business for the Americas must pay more than $470,000 to three investors who claimed damages because their accounts were over-concentrated in Puerto Rico bonds that plunged in value, according to the Financial Industry Regulation Authority Inc.Obdulio Melendez Ramos, Ramon Velez Garcia and Carlos L. Merced had been seeking as much as $570,243 for damages, alleging fraud and negligent supervision, according to the Finra arbitration award document dated March 24. Their claims were filed in October 2014."Although the arbitrators awarded less than the full damages the claimants requested, UBS is disappointed with the decision to award any damages, with which we respectfully disagree," Gregg Rosenberg, a spokesman for UBS, said in an emailed statement. "The decision in this case was based on the facts and circumstances particular to these particular claimants, and is not indicative of how other panels may rule with regard to other custom

House Republicans are preparing legislation to create a new oversight board that would help Puerto Rico control its finances, a move designed to deal with the territory's $70 billion in debt. The legislation is in response to House Speaker Paul Ryan's promise at the end of last year that the House would work with Puerto Rico to come up with "a responsible solution" by the end of March for the territory's massive debt problems. The House Natural Resources Committee is expected to release the bill publicly on Tuesday. A draft bill would create a five-person board designed to audit the territory's government and create new fiscal plans and budget measures. According to a summary of the legislation obtained by The Associated Press, the board would not give Puerto Rico the broad bankruptcy authority it has asked for, but would allow the oversight board to decide whether debt restructuring is necessary. If the board decides debt restructuring is needed in some areas

The House will take up a Puerto Rico relief bill at the beginning of April, according to Speaker   Paul Ryan   (R-Wis.). Ryan told reporters Tuesday that the House Natural Resources Committee was closing in on a final bill and are “on track” to take it up after the Easter recess break. “We’re doing a bipartisan meeting today, and we are working on this on a bipartisan basis,” he said. “And we expect when we come back from the district work period to be acting on it in the Resource committee." The committee is expected to hold a hearing on the Puerto Rico bill, which has yet to be written, on April 13 with a markup the following day, according to a House Democratic leadership aide. A committee spokesperson said a discussion draft will be ready by March 31. Lawmakers will be gone from March 24 to April 11. Ryan had previously set a March 31 deadline for lawmakers to come up with legislation to help Puerto Rico address its economic and debt woes. The Natural Resources Committee has h

Puerto Rico is in deep trouble. The island is currently struggling under $73 billion in outstanding debt, with no feasible way of meeting its obligations. The economy is struggling, resulting both in low tax revenues and a further strain on welfare spending. If nothing is done, default looks to be just around the corner, an outcome that would be catastrophic for Puerto Rico’s future. Many have proposed a variety of solutions, from bailouts, to bankruptcy, to imposing a fiscal control board to manage the island’s finances, but no action has been taken yet. The question we should all be asking is: why not? For good little taxpayers, voters, and citizens, it is natural to assume that when government sets out to solve a problem its decisions are made primarily on the basis of impartial analysis of what is best for all affected parties. The idea of the noble, public-spirited bureaucrat, despite centuries of experience to the contrary, remains stubbornly lodged in the American mind. It woul

HOUSE PUERTO RICO FIX EXPECTED SOON — POLITICO’s Colin Wilhelm reports: A discussion draft of a bill from the House Natural Resources Committee to prevent Puerto Rico from defaulting on its $73 billion in bond debt is expected next week. The committee has already scheduled a hearing and mark up for April 13-14. "The time is running out of the hourglass," Rep. Cynthia Lummis (R-Wy.) told POLITICO this week, adding that she'd expected to see text by now. "I think that because I haven't seen it we're obviously going to defer this into April, which is later than I expected." House members of on both ends of the political spectrum appear to be coalescing over some sort of broad Congressional action to prevent default. Lummis, a member of the conservative House Freedom Caucus as well as the Natural Resources panel, and Rep. Jose Serrano, a senior House Democrat of Puerto Rican descent who has been an active voice during the debt crisis, both agreed that some

Federal oversight might be in the future for Puerto Rico as lawmakers consider ways to rescue the U.S. territory from financial ruin. Island residents call it colonialism, but congressional discussions around a plan for a five-member voting board would give the panel power to subpoena documents from both governments and restructure Puerto Rico’s $72 billion debt, according to a document obtained by the Daily News. The plan is the brainchild of Republican members of Congress who shared a draft of a bill with a small group of Democrats Thursday. The board would be appointed by the President, and “would be an entity within the government of Puerto Rico, but not subject to the control of the governor or the legislature,” the document states. Ricardo Arduengo/AP Some Puerto Rico residents have blasted the idea of a five-member voting board as colonialism. BY Juan Gonzalez Congress mulls over $72B Puerto Rico debt rescue method

An emerging U.S. House Republican bill to address Puerto Rico’s debt crisis would create a strong oversight board and a mechanism to force creditors to accept a restructuring deal, according to a congressional official familiar with the legislative efforts and a written summary. The board’s debt restructuring powers could include all creditors, but only after certain conditions are met, a congressional official said.  The partial draft also provides for the board to petition a judge for a court-supervised restructuring, which would amount to a cram-down mechanism to force resistant investors to accept a deal, according to a Republican-drafted legislative summary circulated Thursday on Capitol Hill and the congressional official.  The proposal would be an alternative to a process under Chapter 9 of the U.S. bankruptcy code, which Republicans have opposed. As part of the plan, lawmakers are also considering safeguarding Puerto Rico from legal action by temporarily prohibiting creditor la

Politicians in Washington are coalescing around a financial plan to rescue Puerto Rico, just weeks before an expected major default on bond payments that would spread more turmoil through the island’s shaky economy. The plan, being drafted as legislation by House Republicans, would not grant Puerto Rico’s most fervent request: permission to restructure its entire $72 billion debt in bankruptcy. It would, however, give the island certain crucial tools that bankruptcy proceedings can offer — but only if it first comes under close federal oversight and meets other conditions. The oversight would be provided by a five-member voting board, selected by the president of the United States from candidates with expertise in finance, law or other relevant fields; at least two would have their primary residence in Puerto Rico. The secretary of the Treasury and the governor of Puerto Rico would also serve on the board, but would not have a vote. The board would have offices both in Washington and S