WASHINGTON – Hillary Rodham Clinton on Tuesday said Congress and the Obama administration should help Puerto Rico restructure its debts under a Chapter 9 bankruptcy, saying the island commonwealth needs partners to "get on a path toward stability and prosperity."
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In a statement, the Democratic presidential candidate stopped short of supporting a federal bailout but said Congress should give the U.S. territory the same ability to restructure its debts as U.S. municipalities and public corporations under the bankruptcy code.
"We're not talking about a bailout, we're talking about a fair shot at success," Clinton said. She called on Congress and the White House to "partner with Puerto Rico by providing real support and tools so that Puerto Rico can do the hard work it will take to get on a path toward stability and prosperity."
Puerto Rican Gov. Alejandro Garcia Padilla said last month the island's $72 billion public debt is unpayable given the current level of economic growth and he would seek a payment moratorium from bondholders as the commonwealth attempts to emerge from a nearly decade-long economic slump.
A growing Puerto Rican community in the presidential battleground state of Florida has pushed the island's politics to the forefront. Clinton's statement came after Maryland Gov. Martin O'Malley, a Democratic candidate, said last month said Puerto Rico should be able to negotiate with its creditors under U.S. bankruptcy laws. Former Florida Gov. Jeb Bush, who is seeking the Republican nomination, has also said Puerto Rico should be able to seek Chapter 9 bankruptcy.
Vermont Sen. Bernie Sanders, another Clinton rival, also backed the bankruptcy protections in a statement Tuesday and pinned the blame on Wall Street, saying the debt "has everything to do with the policies of austerity and the greed of large financial institutions."
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The White House has said it is not considering a federal bailout of Puerto Rico. Legislation allowing Puerto Rico to use Chapter 9 bankruptcy laws is pending in the House. In the Senate, Sens. Charles Schumer of New York and Richard Blumenthal of Connecticut are planning to propose companion legislation.
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