Congress Aims to Give Debt-Ridden Puerto Rico a Free Pass as Long as Obama Wants

A House committee released the third draft of a bill aimed at helping Puerto Rico address its debt crisis. The Puerto Rico Oversight, Management and Economic Security Act (PROMESA) has drawn praise from Minority Leader Nancy Pelosi, D-Calif., quite an achievement for a Republican speaker. However, bipartisanship does not guarantee good policy. The House Committee on Natural Resources bill still contains a troubling provision that would suspend a civil right of bondholders, vendors, and others who do business with the Commonwealth of Puerto Rico by immediately freezing all financial litigation against the territory. Enacting such a “stay” of litigation without supervision by the Oversight Board created in PROMESA would give Puerto Rico’s unpopular government an opportunity to shuffle money around, potentially without consequences, for months. This is not idle speculation: only President Barack Obama can nominate members of the Oversight Board, and Politico reported this week that negotiations stuck temporarily on what happens if the nominations are not submitted as late as Jan. 2017. Read more...