Since Hurricanes Irma and Maria tore through Puerto Rico and the U.S. Virgin Islands, inadequate disaster response and slow recovery efforts have compounded the difficulties Puerto Rico already faced from its enormous debt load. Few investors are willing to put money into rebuilding the island if the existing debt load means that Puerto Rico has no realistic chance to recover. Prior legislation addressing the Puerto Rican debt crisis -- The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) -- was enacted before the hurricanes and was not designed to account for the recent devastation.
"Puerto Rican families were watching debt crush their futures long before Hurricane Maria hit, and this administration has failed in its response," said Senator Warren. "Our bill gives Puerto Rico and other struggling territories a route to comprehensive debt relief and a chance to recover with dignity. It's time for Congress to pass this bill."
"Greedy Wall Street vulture funds must not be allowed to reap huge profits off the suffering and misery of the Puerto Rican people for a second longer. It is time to end Wall Street's stranglehold on Puerto Rico's future, return control of the island to the people of Puerto Rico and give the territory the debt relief it so desperately needs to rebuild with dignity," said Senator Sanders.
"Our fellow citizens in Puerto Rico have been suffering through an economic crisis for years and it's far past time for Congress to step in and help," said Senator Gillibrand. "The U.S. Territorial Relief Act would forgive Puerto Rico's debt and protect the island from predatory hedge funds. I'm proud to support legislation that would give Puerto Rico new control over what happens on the island, and I urge all of my colleagues to do the right thing and help end this terrible economic crisis."
"Hurricanes Irma and Maria were fiscal breaking points for Puerto Rico, which was already struggling before the devastation, “said Senator Markey. "As victims of these storms. Coupled with an incompetent relief effort by the Trump administration, Puerto Ricans deserves access to every tool to rebuild their home both physically and fiscally. The U.S. Territorial Relief Act will provide some much needed economic flexibility for Puerto Rico and other U.S. territories impacted by these disasters."
"More than a year and a half after Hurricane Maria, our fellow Americans in Puerto Rico and throughout other U.S. territories still do not have the resources they need to get back on their feet and restore their communities to full strength," said Senator Harris. "We must do more to fulfill our obligation to provide assistance to these territories, and that includes providing them with the opportunity to pursue comprehensive debt-relief. We must act immediately."
"Puerto Rico needs every tool possible to recover economically and physically from Hurricane Maria," said Representative Velázquez. "This legislation provides a path forward, releasing the Island from Wall Street's chokehold and ensures the needs of the people of Puerto Rico come first. I thank Senator Warren for introducing this legislation and will be introducing the House companion, this week."
The U.S. Territorial Relief Act has three components:
Title I-Territorial Relief: Territories are given the option to terminate their public, unsecured debt if they meet two of these three criteria: (1) population has decreased 5% over 10 years; (2) has received major federal disaster assistance; and (3) per capita debt exceeds $15,000.
Provisions also provide protection for secured creditors and create a judicial process for creditors to contest the extent and perfection of their security interests. The territory's governor and two thirds of each body of the territory's legislature-must approve the debt relief. The option for an eligible territory to terminate its debt cannot be used more than once every seven years.
Title II-Puerto Rico Debt Restructuring Compensation Fund: A special master is designated to allocate $7.5 billion to eligible Puerto Rican creditors and $7.5 billion to eligible mainland creditors whose debt was terminated. Hedge funds and their investors, bond insurers, and many large financial firms are among those ineligible to recovery from the special master.
Title III-Audit Commission: Creates a commission, made up of experts from Puerto Rico, to perform a comprehensive audit of the causes and sources of Puerto Rico's debt and to issue periodic reports.
The legislation is endorsed by American Federation of State, County and Municipal Employees (AFSCME), American Federation of Teachers, the Hispanic Federation, LatinoJustice, National Low Income Housing Coalition, Alliance for Puerto Rico-Massachusetts, CREDO, Food & Water Watch, Hedgeclippers, Inquilinos Boricuas en Accion, Latinos for Healthcare Equity, National Hispanic Medical Association, New York Communities for Change, Public Justice Center, UAW, United Way of Central Massachusetts, Worcester Youth Center, and AIDS United.
"Over the past several years, Puerto Rico has been living with an economic noose around its neck due to its crippling debt crisis and the devastation created by Hurricane Maria. The island government simply does not have the means to pay off its debt and prioritize the well-being of its people. Senator Warren's Territorial Relief Act of 2019 provides Puerto Rico a much-needed mechanism to put its people before financial firms and vulture funds. We look forward to working with Senator Warren and other members of Congress to get this bill passed, and allowing the people of Puerto Rico more control over their own destiny," said José Calderón, President of the Hispanic Federation.
"The U.S. Territorial Relief Act provides a fair, efficient, and constitutional mechanism for helping long-neglected United States territories regain their economic footing," wrote seven law professors with expertise in bankruptcy and financial regulation in a letter expressing support for the legislation. "In sum, the bill balances the need for immediate relief for the territories with protections for property interests, due process, and safeguards against abuse."
"In my opinion, the U.S. Territorial Relief Act is constitutionally sound. I hope that the bill is taken seriously by Congress and that debate can focus on its merits as public policy rather than being diverted by made-up constitutional objections," wrote Laurence Tribe, Carl M. Loeb University Professor and Professor of Constitutional Law at Harvard, in a letter about the bill's constitutionality.
"Puerto Rico needs all the tools available in the federal arsenal to fight poverty and inequality and to create the conditions for sustained economic growth. This bill goes a long way to fairly address Puerto Rico's debt overhang, return capital to creditors, and create some of the conditions needed for the Island to come out of its long term economic depression, the devastation brought about by recent storms, and to prepare and rebuild for long term growth. All US citizens have a stake in the long term well being and viability of Puerto Rico," said Héctor R. Cordero-Guzmán, Professor at the Marxe School of Public and International Affairs at Baruch College of the City University of New York (CUNY).
Senators Warren, Sanders, Gillibrand, Markey, Harris and Rep. Velázquez originally introduced the U.S. Territorial Relief Act in July 2018.
Senator Warren has been a steadfast champion for Puerto Rico. For more information about her extensive work fighting for robust recovery efforts for Puerto Rico and the U.S. Virgin Islands since Hurricanes Irma and Maria, visit www.warren.senate.gov/puertorico.