WASHINGTON — The Treasury Department's Antonio Weiss and Puerto Rico Gov. Alejandro Garcia Padilla will testify on Thursday before a Senate committee on the territory's economy, debt and options that should be considered by Congress.
The Senate Committee on Energy and Natural Resources is holding the hearing as Puerto Rico continues its downward spiral towards insolvency. Melba Acosta, president of Puerto Rico's Government Development Bank told members of the Senate Finance Committee late last month that the territory "has passed the tipping point" and "faces an economic and liquidity crisis beyond what any jurisdiction in the United States has faced in generations."
Weiss is counselor to Treasury Secretary Jack Lew and his appearance will follow recent discussions between the department and Puerto Rico officials about the possibility of getting bondholders to exchange the debt of the territory and its authorities for some kind of "superbond" that would be backed with a broad array of Puerto Rico tax revenues that the Treasury would maintain and administer. But that proposal faces a number of obstacles, including getting bondholders to agree to an exchange.
The GDB disclosed on Wednesday that it was unable to persuade a group of "Ad Hoc Holders" to engage in a proposed debt exchange.
Treasury officials have continued to say they will not provide any direct financial assistance or federal bailout to Puerto Rico. They have urged Congress to give the territory's authorities access to Chapter 9 bankruptcy protection, but Republican lawmakers have balked at the idea.
The other witnesses include Resident Commissioner Pedro Pierluisi, a non-voting member of Congress who has sponsored a Puerto Rico bankruptcy bill pending in the House, and Sergio Marxuach, policy director at the San Juan, P.R.-based Center for a New Economy. Marxuach told Senate Finance Committee members last month that Congress should give Puerto Rico equal treatment to U.S. states in bankruptcy, health care and other laws such as the Jones Act and the federal Earned Income Tax Credit.
Steven Fetter, founder and president of Regulation Unfettered, an energy advisory firm, is also listed as a witness for the hearing.
The committee is chaired by Sen. Lisa Murkowski, R-Alaska. Sen. Maria Cantwell, D-Wash., is ranking minority member.
