Lew on Puerto Rico: ‘The crisis is now’

Treasury Secretary Jack Lew said Congress is running out of time to act on Puerto Rico.

“The crisis is now,” he said in a recent interview with Univision. “There is an urgent need for Congress to act because the alternative to congressional action … is chaos for 3.5 million Americans who call Puerto Rico home. That’s not acceptable.”

{mosads}Puerto Rico appears set to default on a payment of over $400 million that is due on May 1, and a multibillion dollar payment due July 1 looms on the horizon.

But while Lew is urging Congress to step on the gas, he also made clear that the administration is not ready to sign off on a bill that is currently being crafted by House Republicans.

Lawmakers are still huddling privately to try and come up with a bill that can garner enough support from both parties. Lew said the administration is trying to play a helpful role but aired concerns with an earlier draft version of the bill.

“It’s not yet in a form that works,” he said, noting that Speaker Paul Ryan (R-Wis.) and House Natural Resources Committee Chairman Rob Bishop (R-Utah) are still working to line up bipartisan support.

“It’s hard because there are competing views,” he added. “There are pressure that are trying to pull that apart.”

One of those pressures is a concerted effort by some investors in Puerto Rican debt to discourage any legislation that would allow the island to restructure its debt through the courts. The Puerto Rico legislation stalled earlier this month in part thanks to growing conservative opposition, who were worried it could be seen as a bailout.

The Center for Individual Freedom, a dark money group that does not have to disclose its donors, had been running ads nationwide blasting the legislation and labeling it a “bailout.” That left GOP leaders needing to spell out for members that no federal money goes to Puerto Rico under the current proposal.

Lew said members need to hold strong against groups that might be working against a compromise.

“Those who want to get this resolved have to stay determined. They can’t let the forces that want to pull it apart prevail,” he said. “It’s not as if all creditors are against this. The interest of the subgroup that are against it can’t be allowed to become the dominant conversation.”

While they don’t usually see eye to eye, Lew and Ryan had the exact same message when it came to the bill: It’s not a bailout.

“Restructuring is the alternative to a bailout,” said Lew. “Anyone who thinks that a bailout is on the horizon should want the restructuring.”

Under the current proposal, the federal government would establish an outside fiscal review board for the island, and in turn Puerto Rico would be able to seek a court-ordered restructuring of its debts if voluntary talks with creditors fail.