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Old 02-25-2016, 05:29 PM
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Mary Pat Campbell
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
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Feb 25 The U.S. Treasury envisioned giving Puerto Rico's pensioners stronger legal protection than holders of its constitutionally backed bonds if it went bankrupt, according to a draft of a proposed plan obtained by Reuters.

The draft, circulated in Washington late last year but not made public in the run-up to President Barack Obama's Omnibus budget, imagined a broad structure aimed at protecting citizens while providing flexibility to cut debt, an approach consistent with what Puerto Rico's leaders have sought.

One source familiar with the document and a second Congressional source said Treasury was involved in crafting it with senators from both parties, although it was unclear who wrote it.

"We would not want to put at risk the payments that are due to pensioners," Treasury Counselor Antonio Weiss said during a hearing on Puerto Rico on Thursday in front of the House Natural Resources Committee, when asked whether there should be any "sacred cows" exempt from a restructuring in Puerto Rico.

However, Weiss said it had been "incorrectly reported" that a Treasury plan would have given preference to public pensions, without elaborating.

Puerto Rico's biggest pensions face a combined funding shortfall of roughly $43.5 billion, or 96 percent, and are projected to run out of assets by about 2019.

The language of Treasury's draft "gives a debtor latitude to give better treatment to pensions than to GOs," something that would make it "far more controversial" to creditors, Melissa Jacoby, a bankruptcy expert and professor at UNC-Chapel Hill, told Reuters.

Weiss on Thursday called Puerto Rico's pension shortfall "unheard of." It is the largest deficit of any U.S. public pension since at least 2000, according to

Yet pension debt is not included in Puerto Rico's oft-cited $70 billion debt load, despite the fact that the payments will become the Puerto Rico government's responsibility when the pensions run out of assets around 2019. (Reporting by Nick Brown; Editing by Kim Coghill and Meredith Mazzilli)


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