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Reps. Louie Gohmert of Texas and Dave Brat of Virginia were among the conservatives who voted against a bill to address Puerto Rico's debt crisis. (Photo: Willis Bretz for The Daily Signal) A bill establishing a legal framework for Puerto Rico to restructure its $72 billion debt load passed the House Thursday by a 297-127 vote after months of haggling between the Obama administration, Democrats, bondholders, unions, Puerto Rico officials—and conservatives. About the only thing conservatives agree on about legislation the House passed Thursday night providing rescue to Puerto Rico’s debt crisis is that it’s not a bailout. “There are...

...Paul Ryan has reached a tentative deal with the Treasury Department on a rescue package to ease Puerto Rico's debt crisis, according to House Natural Resources Chairman Rob Bishop, who has been leading negotiations. “We are moving forward — there is a deal,” the Utah Republican said Wednesday afternoon, adding that legislative text of the deal would be released later on Wednesday. Details of that deal were released by Bishop’s committee Wednesday night, when the bill was introduced. The agreement represents a breakthrough on an issue that has been stuck in congressional limbo for months. Ryan (R-Wis.) said last year...

After weeks of delays, House Republicans are moving forward with legislation to help Puerto Rico manage $70 billion in debt. A revised bill introduced late Wednesday would create a control board to help manage the U.S. territory’s financial obligations and oversee some debt restructuring. Though it is the third version of the legislation, those objectives remain unchanged. House Natural Resources Committee Chairman Rob Bishop, R-Utah, has led negotiations on the bill and has worked closely with House Speaker Paul Ryan, R-Wisc., congressional Democrats and the White House. The aim has been to write legislation that could pass both the House...

The island’s troubles have their origin in an era of corporate tax incentives in the 1970s that exempted firms from paying federal taxes on profits earned in Puerto Rico. This was done to prevent tax-allergic American companies from setting up shop outside the country. Pharmaceutical, textile and electronics companies flocked to the island to spark a manufacturing boom that lasted for around two decades. In 1996, the American government, under the Clinton administration, started weaning Puerto Rico off these tax breaks to offset some of the country’s federal deficit. The largesse disappeared entirely in 2006 and its economy has suffered...

Puerto Rico Secretary of Economic Development and Commerce (DDEC), Alberto Bacó Bagué, distanced himself from Governor Alejandro Garcia Padilla's strategy to project to the island as facing a humanitarian crisis. The head of the DDEC maintains that the humanitarian crisis in the island is a strategy of the Secretary of United States Department of the Treasury, Jacob Lew. He stressed that Puerto Rico is being affected by a conflict between the Republican Party and the Democratic Party. "This is a strategy by Mr. Treasury Secretary, he is well respected, but it is a strategy in his mind and I worry...

As Wilbur Ross so eloquently noted, for Puerto Rico "it's the end of the beginning... and the beginning of the end," as he explained "Puerto Rico is the US version of Greece." However, as JPMorgan explains, for some states the pain is really just beginning as Municipal bond risk will only become more important over time, as assets of some severely underfunded plans are gradually depleted. But, as JPMorgan details, Muni risk is on the rise for US states, but broad generalizations do not apply (in other words, these five states are 'screwed')... The direct indebtedness of US states (excluding...

Puerto Rico is stunningly beautiful. It's a virtual paradise...Caribbean white sand beaches, a close proximity to the U.S., they speak both English and Spanish, if you're an American citizen you don't need for a passport as Puerto Rico is a US Commonwealth. They've got snorkeling, great food, a rainforest, and a stunning historical fort from the imperial days sitting atop a bluff overlooking the sea. With all that natural attraction you'd think Puerto Rico would be knocking it out of the park economically. Tourism alone should be the driving force to keep the economy rocking. Every American should want to...

The government of Puerto Rico has failed to make $37.3 million in debt repayments, a selective default dictated by lack of liquidity, Public Affairs Secretary Jesus Manuel Ortiz told EFE Tuesday. The island's government signaled last week that it would not make the payments, which were due by midnight Monday. The defaulted debt corresponds to $35.9 million in bonds issued by the Puerto Rico Infrastructure Finance Authority and $1.4 million in Public Finance Corp. bonds. Rating agency Standard & Poor's said Monday that if Puerto Rico didn't pay the $37.3 million by midnight, the bonds would be declared in default....

There's no "Happy New Year" for Puerto Rico. Puerto Rico will default -- again -- on some of its bonds payments. The island owes about $1 billion to creditors on January 4. Governor Alejandro García Padilla said Wednesday that the island will make all payments except for $37.3 million. He claims the debts that will go unpaid were never guaranteed by Puerto Rico and the creditors should know this. It will be the second default in the island's history. The first default occurred in early August. Puerto Rico is trying to figure out how to deal with about $73 billion...

The U.S. territory of Puerto Rico owes more than $70 billion—about $19,729.43 per resident—in debt to creditors and investors. First to note the territory’s fiscal problems were the credit rating agencies, which downgraded the territory’s bond status to “speculative,” the first of three steps along the junk-bond path to loan default. Over the summer, about a year and a half after insiders warned of the territory’s looming problems, Gov. García Padilla (PPD) announced, “[T]he debt is not payable.” “My administration is doing everything not to default,” Garcia Padilla said in an interview with The New York Times. “But we have...

It’s true, as Paul Krugman says, that Greece and Puerto Rico are not in exactly the same position. PR is bust to some extent, yes, but it’s not in the middle of a catastrophe, as Greece is. However, there is also a similarity in their situations, one that’s extremely instructive. They’re both suffering from being in a monetary policy zone, a currency zone, that isn’t really suitable for their circumstances. One of the two is in a fiscal policy union as well as that monetary union, the other is not. And it’s long been agreed that if you’re to have...

The debt crisis in Puerto Rico could potentially cost financial institutions in the United States tens of billions of dollars in losses. This week, Puerto Rico Governor Alejandro Garcia Padilla publicly announced that Puerto Rico’s 73 billion dollar debt is “not payable,” and a special adviser that was recently appointed to help straighten out the island’s finances said that it is “insolvent” and will totally run out of cash very shortly. At this point, Puerto Rico’s debt is approximately 15 times larger than the per capita median debt of the 50 U.S. states. Yes, the Greek debt crisis is larger,...

I really had not been paying much attention to the Puerto Rico debt situation. After all, $72 billion in debt that might go bad – big deal. The Fed can print up $72 billion in credit lines with the push of a button. But a friend of mine happened to mention to me today (Monday) that MBIA’s stock was down over 23% and Assured Guaranty’s stock was down over 13%. That woke me up. Companies like MBI and AMBAC underwrite credit “enhancement” guarantees on these massive cesspools of debt – and the associated derivatives that are “wrapped around” the debt...

The governor of Puerto Rico told the New York Times that the island cannot pay back it's $72 billion debt and will seek permission from its creditors to defer payments. The news precedes an address by Governor Alejandro Garcia to the Puerto Rican legislature, where he will unveil a budget that cuts about $670 million from a $9.8 billion budget, while setting aside another $1.5 billion to pay the debt. Fox News: Gov. Alejandro Garcia Padilla's spokesman, Jesus Manuel Ortiz, confirmed that the island's government is seeking to defer payments while negotiating with creditors. He confirmed comments by Garcia that appeared...

With the financial world transfixed by Greece's debt-driven meltdown, Puerto Rico announces it can't pay its $73 billion in debt. Once again, we're learning that welfare statism is no replacement for fiscal responsibility. Compared to Greece's $353 billion in debt, Puerto Rico's $73 billion doesn't sound so big. On a per capita basis, it's about a third less. But appearances deceive. Puerto Rico is in deep, owing actually much more than that amount. We learned this after a report on Monday, co-authored by former International Monetary Fund No. 2 Anne Krueger, revealed the island's finances are a shambles. The devastating...

The governor of Puerto Rico has admitted that it can't keep paying down the over $72 billion worth of public debt obligations. As a result, it finds itself in a uniquely awful position. It can't go into bankruptcy according to its own laws, so now it has to deal exclusively with its creditors to restructure its debt. That means it has to deal with Wall Street. "I think the surprise was that it happened this quickly," said Brian Kelly, CEO of Connecticut-based fund Brian Kelly Capital. "We thought it would take 6 months to a year... the solution is a...

Puerto Rico's governor believes the U.S. territory will not be able to pay back its $72 billion public debt, a spokesman told the Associated Press late Sunday. Gov. Alejandro Garcia Padilla's spokesman, Jesus Manuel Ortiz, confirmed that the island's government is seeking to defer payments while negotiating with creditors. He confirmed comments by Garcia that appeared in a report in The New York Times published late Sunday, less than a day before Garcia is scheduled to deliver a public address amid debate on a $9.8 billion budget that calls for $674 million in cuts and sets aside $1.5 billion to...