Today, the Subcommittee on Indian, Insular and Alaska Native Affairs held an oversight hearing to further examine possible solutions to the Puerto Rican debt crisis and avenues for the Commonwealth to achieve improved fiscal management and long-term sustainability.

The panel discussed concepts surrounding the establishment of an independent control board authority. They argued debt restructuring alone will not ensure future prosperity and financial independence for Puerto Rico.

“Solving the immediate fiscal crisis, while absolutely essential, will not alone be sufficient to bring the Island back to the position of economic self-sufficiency,” stated former District of Columbia Mayor Anthony Williams. “Anything less robust than the work of such an authority is not going to provide a sustainable solution to Puerto Rico’s serious financial challenges; and waiting any longer to see if somehow the situation self corrects is fundamentally misguided.”

The Puerto Rican legislature has had the opportunity to enact a number of financial and structural reforms that would assist in alleviating the growing debt crisis. However, as demonstrated by the legislature’s recent failure to pass a deal that would restructure Puerto Rico’s public utility’s debt, such legislative action is in serious doubt.

Witnesses outlined the negative implications of enacting Chapter 9 bankruptcy protections, including detrimental impacts to future municipal investment in the Commowealth and harmful implications for investors on the island and the mainland.

“These people live on Main Street, not Wall Street. These investors are ordinary people who invest for retirement and for their children’s education,” said Mr. Thomas Moers Mayer, Kramer Levin Naftalis & Frankel, LLP Partner.  “I don’t think Puerto Rico will easily recover access to the capital markets if it ever uses Chapter 9. And I think it will have serious knock-on effects across the country.”

"Congress needs to be mindful of the consequences to the cost of municipal credit across our Nation if the Island's debt obligations are not resolved in a manner that the municipal bond market sees as fair and equitable,” stated Williams.

Click here to view the full witness testimony.