Senate poised to send Puerto Rico debt bill to President’s desk
It seems as thought the anticipation is over, and later tonight, the US Senate will be approving HR 5278, or PROMESA. This would be the last stage for the bill to be approved by Congress before it is sent to President Barack Obama to become law with his signature, which is expected.
Lawmakers reached agreement on the timing of the vote after the bill cleared its most significant remaining procedural hurdle earlier Wednesday in a 68-32 vote. The White House has said the president will sign the measure, which would create a financial control board to help restructure Puerto Rico’s $70 billion in debt and manage its finances.
The Senate’s action boosted the price of Puerto Rico debt and the shares of bond-insurance companies, which have guaranteed many of the island’s securities against default. Puerto Rico general obligations due in 2035, the most frequently traded security, rose to 66.4 cents on the dollar Wednesday from 65.2 cents Tuesday. Shares of MBIA Inc. rose 23 cents to $6.76, while Assured Guaranty Ltd. climbed 83 cents to $24.65.
Final passage will cap a long saga of bipartisan negotiations and odd political bedfellows that found the leaders from both parties and the White House lobbying furiously for the deal to avert what Treasury Secretary Jacob J. Lew repeatedly warned would be chaos after the island’s likely July 1 default on part of a $2 billion debt payment.
Democratic leaders backed the bill despite strong opposition from their traditional allies in labor — who were furious about limitations on the minimum wage and overtime rules added to the package by House Republicans — as well as concerns from Puerto Rico advocates like Senator Bob Menendez, a New Jersey Democrat who spoke for hours against the bill Tuesday night. He was calling for a chance to amend the bill to make it more favorable to the territory and ensure the island had representation on the control board.
Amending the bill would have guaranteed missing the Friday deadline, because the House isn’t in session this week.
With today’s events, it seems as though Congress will act before the July 1 deadline Puerto Rico faces, although this in and of itself does not mean much. Puerto Rico will still likely default on the July 1 payment, as the oversight board contained in the bill, and its restructuring powers are not going to be in place by then. It nevertheless seems to have worked for officials to pressure Congress to act using the deadline this week.
Attention should now move to who will compose the board, and when they will take office.