WASHINGTON, May 19 (UPI) -- The U.S. House of Representatives on Thursday reached an agreement over potentially restructuring Puerto Rico's $70 billion of debt.
The bipartisan Puerto Rico Oversight, Management and Economic Stability Act seeks to address Puerto Rico's financial crisis "while preventing a taxpayer bailout for the territory."
"We have insisted that our response meet basic principles, and first among them is protecting taxpayers from a bailout. Today, Republicans and Democrats came together to fulfill Congress's constitutional and fiscal responsibility to address the crisis with the introduction of PROMESA ... the most responsible solution to the crisis because it gives Puerto Rico a path to real reform while protecting taxpayers."
A seven-member board to oversee Puerto Rico's finances will be established. The bill's primary goal is to reduce Puerto Rico's debt burden, which currently absorbs about a third of its revenues.
Congress has been at odds over helping Puerto Rico get out of massive debt. Puerto Rico cannot afford to pay debts and has no legal power to declare bankruptcy. Puerto Rico Gov. Alejandro Garcia Padilla has previously urged for Congress to take action.
The commonwealth hopes Congress will allow it to restructure its debts, or more ambitiously, to extend the ability to declare Chapter 9 bankruptcy -- an unlikely scenario, as those who gave loans to Puerto Rico did so knowing bankruptcy was not an option.
About 45 percent of Puerto Ricans live in poverty, where the median household income is $19,000. Puerto Rico missed the majority of a $422 million debt repayment earlier this month.