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Congress To Oversee Puerto Rico Financial Board

House Republicans are preparing draft legislation that will create a Financial Board to help the Commonwealth of Puerto Rico to oversee control of it’s financial obligations and help the island to deal with over $70 billion in debts.

The draft legislation, known as the “Puerto Rico Oversight, Management, and Economic Stability Act” or PROMESA, does not provide Puerto Rico with Chapter 9 Bankruptcy Protection, as they had requested in the past. Instead, the draft calls for a five person board to be designated by the President of the United States and that will have limited access and non-voting powers, to both the Governor and the Treasury Secretary of the island.

However, the legislation is being challenged by Puerto Rico’s administration, led by Governor Alejandro Garcia Padilla, while the Democrats in Congress had been asking for a restructuring framework, with no cost for the US taxpayers.

Puerto Rico, being a US Territory, cannot declare bankruptcy protection under Chapter 9, like States can. The legislation has also raised questions over the fact that since the 1950’s, Puerto Rico was approved to draft their own constitution and was given sovereign powers. Although Congress still can legislate laws in Puerto Rico as with any U.S. territory, like Guam and the U.S. Virgin Islands.

Last October, President Obama asked Congress to consider extending Chapter 9 protection to Puerto Rico’s municipalities.  The draft itself does not changes any US Laws in regards to who can request bankruptcy protection.

Puerto Rico’s Resident Commissioner Pedro Pierluisi, a non-voting delegate for the island in Congress, stated that the bill itself, is a continuation of the colonial relationship that the U.S. has imposed in Puerto Rico, since the island was invaded in 1898, during the Hispanic American War against Spain.

Pro-Independence leadership also called for rejection of the legislation, since it does not recognize the sovereignty that was given to the Puerto Ricans to decide their course of action on how to deal with the current crisis.

(Image: AFP)

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