Obama Administration Urges Quick Action on Puerto Rico

The Bond Buyer reports:

The Obama administration urged Congress to move quickly to address Puerto Rico's debt crisis after commonwealth officials warned they might run out of money before the end of the year.

“Given the commonwealth’s projection that it will exhaust its liquidity later this year, Congress must act now to provide Puerto Rico with access to a restructuring regime," the Treasury Department said in a press release after Treasury Secretary Jacob Lew met with the territory's Gov. Alejandro García Padilla on Thursday. "Without federal legislation, a resolution across Puerto Rico's financial liabilities would likely be difficult, protracted, and costly."

The letter suggested to some observers that the administration wants to go beyond the bankruptcy legislation proposed so far, and that that Puerto Rico itself - and not just its public corporations and municipalities -- should be given access to a restructuring process.

Earlier this year bills were filed first in the U.S. House of Representatives and then the U.S. Senate to allow Puerto Rico's cities and public corporations to use Chapter 9 bankruptcy for their debts. The bills have yet to advance. Less than half of Puerto Rico's $71 billion of debt is owed by public corporations and municipalities.

The Welfare State crack-up.