WASHINGTON -- U.S. Sen. Charles Schumer, the chamber's third-ranking Democrat, said he's seeking Republican support for legislation that would allow Puerto Rico's government agencies to seek bankruptcy protection.
Schumer, D-N.Y., said he and Sen. Richard Blumenthal, D-Conn., have spoken about the measure with Republican lawmakers such as Florida Sen. Marco Rubio and Texas Sen. John Cornyn, the chamber's No. 2 Republican.
"We're hopeful we can get this to be a bipartisan bill," Schumer said during a news conference Wednesday.
The two Democrats will need help from Republicans to win passage in the Senate, where Republicans hold a 54-46 majority. The bill would be a companion to House legislation sponsored by Puerto Rico's nonvoting member of Congress, Pedro Pierluisi, and backed by Rep. Nancy Pelosi, the House Democratic leader.
Puerto Rican Gov. Alejandro Garcia Padilla said last month that the island's $72 billion public debt is unpayable after a nearly decade-long economic slump.
The island, which is excluded from a part of the U.S. bankruptcy code used by municipal entities and cities such as Detroit, had a local restructuring law thrown out by the U.S. Court of Appeals in Boston. The dispute centered on whether the island could make its own rules for allowing public agencies to seek protection from creditors.
The country now is seeking to restructure its debt.
President Barack Obama's administration isn't contemplating a bailout for Puerto Rico and has urged Congress to examine the Chapter 9 legislation instead.
The Treasury Department urged Congress to quickly advance legislation that would provide an orderly way to manage the financial challenges of public corporations.
"The Puerto Rican people -- over 3.5 million U.S. citizens -- have persevered through a deep recession," the department said in an emailed statement Wednesday. "They should not be left to manage their financial challenges in an untested and potentially disruptive process."
Federal Reserve Chairman Janet Yellen said the Fed "can't and shouldn't be involved" in helping Puerto Rico. She pointed to Congress as the source of potential help.
"I think it's appropriate for Congress to consider what's best to do in this case," Yellen said in response to a question during testimony before the House Financial Services Committee.
Blumenthal said during the news conference that allowing Puerto Rican agencies to use Chapter 9 bankruptcy would "avoid disaster" and "prevent Puerto Rico from going over the fiscal cliff that is entirely preventable."
Absent such legislation, the island's unresolved debt "could lead to a humanitarian crisis" that might include the closing of schools, Schumer said.
Puerto Rico and its agencies have racked up $72 billion in debt as a result of the island's history of borrowing to cover budget deficits that have resulted from a stagnant economy.
Its economy has struggled to grow since 2006, and the island's 12.4 percent unemployment rate is more than double the U.S. average. Residents have left the island to find work on the U.S. mainland, shrinking the island's population by 7 percent in the past decade.
Garcia Padilla last month said Puerto Rico's debt wasn't payable and that he would seek to delay payments "for a number of years." He directed island officials to craft a debt-restructuring plan by Aug. 30.
To help relieve the island's debt load, the governor is urging Congress to allow Puerto Rico's public corporations to file for bankruptcy protection.
"Action by Congress on Chapter 9 is necessary so that together we can solve this crisis," Garcia Padilla said in a statement Wednesday. "I will continue to enact cost-cutting and job-creation measures in Puerto Rico."
He met Tuesday with lawmakers in both parties to discuss the bankruptcy bill.
If Puerto Rico agencies had access to Chapter 9, island officials have said it may apply only to certain public corporations, such as the power utility, water agency and highway authority. Those entities owe about $20 billion combined.
Information for this article was contributed by Michelle Kaske of Bloomberg News and by staff members of The Associated Press.
A Section on 07/16/2015