The White House said Monday that President Obama won’t bail out Puerto Rico, which is facing default on its municipal bonds.
“There’s no one in the administration that’s contemplating a federal bailout of Puerto Rico,” said White House press secretary Josh Earnest, who added that Treasury officials and others in the administration are working with officials in the U.S. territory to “get access” to available federal resources.
Gov. Alejandro Garcia Padilla said Monday that the territory will be unable in the coming days to repay $72 billion in debt. He said the government’s efforts to cut spending and restructure its debt have failed.
Mr. Earnest said the administration has urged Congress to approve a Chapter 9 bankruptcy “mechanism” for Puerto Rico, which would allow the island’s public corporations to declare bankruptcy. As a commonwealth, Puerto Rico is not allowed to use Chapter 9 of federal bankruptcy law.
He said the administration also has been using an inter-agency task force to work with officials in Puerto Rico “to help them understand exactly what kinds of federal programs they would qualify for based on existing resources.” A similar task force was deployed to help the city of Detroit handle its bankruptcy.
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