A disorderly resolution to Puerto Rico’s debt problems would be costly not only for the territory but for the United States as a whole, the US Treasury Secretary has said as he urged Congress to take action to tackle the crisis.
In a letter to Orrin Hatch, a top Republican senator, Jack Lew called for Congress to amend bankruptcy laws to help smooth the way to a restructuring of debts that the island’s leadership have said cannot be repaid. He insisted there was no prospect of a Federal bailout of the economically stricken territory.
“The continued deterioration of Puerto Rico’s economic and financial conditions has the potential to further harm retiree investment portfolios across the country,” Mr Lew wrote to Mr Hatch, who chairs the powerful Senate Finance Committee. “A significant portion of Puerto Rico’s debt is still held directly by individual retail investors or indirectly through the municipal bond funds they own.”