February 25, 2016
Today, the House Committee on Natural Resources held an oversight hearing to review the U.S. Department of the Treasury’s analysis of the Puerto Rico situation and the Obama Administration’s plan to address the crisis.
Counselor to the Secretary of the U.S. Department of the Treasury Antonio Weiss delivered testimony outlining the Administration’s call for a debt restructuring authority paired with a strong, independent oversight board to address the crisis.
"We propose a restructuring authority, pursuant to the territorial clause of the U.S. Constitution," Weiss stated. "Accessing this territorial restructuring authority would be conditioned on acceptance of strong, independent federal oversight.”
Weiss specifically addressed calls for Chapter 9 in his testimony stating: “Chapter 9 was carefully designed for states, in conformance with the 10th Amendment of the U.S. Constitution, to enable municipalities to adjust their liabilities. Puerto Rico is neither a state nor a municipality. What we need here is a tailored solution permitted under the U.S. Constitution to address the complex, inter-connected liability structure of an entire territory.”
Alternatively, Weiss said the Administration’s plan “would help remove legal uncertainties, improve fiscal governance and return Puerto Rico to the kind of economic growth that attracts market capital.”
Rep. Darin LaHood (R-IL) questioned Weiss on the prospect of private sector investment in Puerto Rico given a strong control board.
“There is an enormous amount of… private sector capital that is ready to invest in Puerto Rico be that in alternative sources of energy generation, be that in modernizing the electricity grid, which is terribly out of date,” Weiss answered. “The problem we run into time and time again when we talk to investors is this uncertainty that the economy faces makes it impossible for private sector participants to invest and plan over any meaningful time horizon… Unless we can stem this tide and create a base for the government and the private sector to plan against, we are deeply concerned that all of that third party capital will never come into the island.”
Reps. Jeff Duncan (R-SC) and Ryan Zinke (R-MT) raised concerns over Puerto Rico’s failure to produce audited financial reports.
“We think there needs to be an ability to audit independently at the level of the oversight board and to produce revenue forecasts that are independent," Weiss responded.
In response to the testimony, Chairman Bishop issued the following statement:
“There is broad agreement that the Puerto Rican government lacks the capacity to affect change over its finances. The island continues to spiral into economic chaos on the verge of a humanitarian crisis. Failure to change course will have grave consequences for Puerto Rico and Americans.
“Puerto Rico has yet to turn over its audited financial statements, which is emblematic of their inability to affect positive change. The only way to obtain these statements is through a strong control board vested with the authority to uncover what’s on the books.”
Today’s hearing was the third and final oversight hearing on Puerto Rico before the Committee produces legislation to address the crisis.
Click here to view the full witness testimony.