US House of Representatives provides contingency plan on Puerto Rico's crippling debt crisis
Apr 17, 2016 09:34 AM EDT
The debilitating debt that Puerto Rico is facing has been given a contingency plan by U.S leading Republicans. The lawmakers also alleged the investing allied groups of misleading the Congress.
According to the Washington Post, the country of Puerto Rico which includes some of its various corporations and political subdivisions has a debt of more than $70 billion to a number of different creditors and holdout bondholders. Since then, the country has been struggling to get out of its debt situation. The country however, needs to pay off $422 million of its debt before May 1 and another $2 billion by July.
As reported by the Fiscal Times, despite the plan, investors would face loss if the plan will materialize. Creditors and investors alike are asking the Congress to protect their bottom lines. The rescue plan adopts some of the principles of bankruptcy law and some lawmakers don't like the idea of Puerto Rico modifying its bond issue because it will create chaos in the municipal market.
Utah Representative Rob Bishop, who is also the head of the House Natural Resources, however, said that the accusations for a government bailout were "crap". He added that the plan will protect taxpayers and avoid spending the money of the government as per Reuters.
Representative Tom McClintock of California, who opposes the plan, said it would do more damage than provide help. He added that if they can do it to Puerto Rico, then they can do it to other states as well.
Bishop's effort in making the plan work has been supported by House Speaker Paul Ryan. Ryan believes that it will hold the right people accountable for the country's crisis. The House Speaker also applauded the idea of an independent board that will settle investor disputes. Ryan, however, will need the votes of many fiscally-conservative Republicans in order to get the rescue plan through the House of Congress.