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Conservative Republicans, though, fear taxpayers will be left on the hook. They also don’t want to rewrite rules creditors agreed to when they invested in the U.S. territory.
“If Congress rewrites the law for Puerto Rico, every lender in every state will no longer trust the security of their own loans to those states,” said Rep. Tom McClintock, California Republican.
Mr. Ryan publicly endorsed the bill Tuesday, saying it “holds the right people accountable for the crisis, shrinks the size of government and authorizes an independent board to help get Puerto Rico on a path to fiscal health.”
Yet members of his own caucus are still not convinced. They say Puerto Rico’s problems were self-made, so the island will have to take responsibility for digging itself out of the morass.
“It’s Washington going in and determining the local affairs of a jurisdiction,” Alfonso Aguilar, president of the Latino Partnership for Conservative Principles, said of Republican objections. “This is a problem created in Puerto Rico and should be resolved by Puerto Ricans.”
He said Mr. Ryan appears to be following “classic Boehner strategy” and risks a messy, intraparty fight on the floor.
Mr. Bishop, meanwhile, has retooled his original draft plan to water down the powers of the oversight board.
Commissioner Pedro Pierluisi, the island’s nonvoting member of Congress, said the latest version calls for a “back and forth” between the oversight board and Puerto Rican government to reach consensus rather than letting the unelected board overrule local leaders.
“This is the bottom line: My constituents and I will accept this oversight, provided — let me say again, provided — we also get a meaningful debt restructuring mechanism,” Mr. Pierluisi said.
The newest version will allow the oversight board to forge ahead with debt restructuring on classes of creditors even if there are some holdouts, so long as two-thirds of creditors in each pool agree to the arrangement.