Congress, White House strike a rescue deal for Puerto Rico

Associated Press

WASHINGTON

House Republicans and Democrats reached a rare, election-year deal with the White House to try to rescue Puerto Rico from $70 billion in debt as millions of Americans in the cash-strapped U.S. territory struggle with the loss of basic services.

A revised House bill introduced late Wednesday would create a board to help manage the territory’s financial obligations and restructure some debt. Negotiations between the Obama administration and House Speaker Paul Ryan’s office helped finalize the legislation.

It is a “fair, but tough bipartisan compromise,” Treasury Secretary Jack Lew said.

Ryan, R-Wis., said the legislation would avoid an eventual taxpayer bailout.

Puerto Rico, mired in a decade-long recession, already has missed several payments to creditors. A $2 billion installment, the largest yet, is due July 1.

The island’s businesses have shuttered, schools lack sufficient resources such as electricity, and some hospitals are limiting treatment or drugs. Puerto Rico’s governor used a state of emergency this week to protect one public agency from lawsuits.

Like U.S. states, Puerto Rico cannot declare bankruptcy. The legislation would allow the control board to oversee negotiations with creditors and the courts over reducing some debt.