This legislation as is. Wall street journal and bloomberg have also issued editorials supporting this legislation and saying that it is not going to have a negative impact in the municipal markets at large. To the contrary, if we dont do anything, that could have an impact in the markets because the bonds are held by thousands of investors, institutional and individual, all over america. And we need to get the house in order. Now, in terms of the status of puerto rico, again, i have to say this is not going to set a precedent for the state. I hate that that is the case because i would love puerto rico to be a state. But puerto rico is a territory. And as a territory, we can do we can treat puerto rico differently than the states so long as we have a rational basis for doing so. That has been the position of the u. S. Supreme court for ages now. When we talk about constitutional debt coming from puerto rico its not the same as constitutional debt coming from the states because puerto ricos constitution is subject to the u. S. Constitution, and particularly the territorial clause in the u. S. Constitution. That is why we have the power to treat general Obligation Bond holders differently than they are treated elsewhere in america. Stly, i am not promoting being unfair to any class of creditors. All im saying is that all of them should be part of the solution not part of the problem. We cannot be listening to one particular class over the others. We should be encouraging them all to engage in negotiations. And once, for example, two thirds of them agree on a potential restructuring of the debt of any Government Entity of puerto rico, then this bill allows the board to take that deal to court and enforce it on all the creditors. Thats going to be good for any debt issuer of puerto rico. Lastly, when we talk about chapter nine, i introduced chapter 9 so that puerto rico would be treated as a state and it was in congress will to do so. So that is not what we are talking about now. We are talking about something similar but again is in the hands of the board. That wouldnt happen in any state. It is happening only in puerto rico as a territory. I oppose this amendment. Is there further discussion . Mr. Fleming. Well, let me say first of all that the fact that puerto rico is a territory and not a state does not in any way prevent these actions being taken for a state as well. There is no constitutional or legal barrier to doing that. This opens the way psychologically and in every other way to do that. With respect to the general bond holders deciding to sell out to other funds on the way because they heard rumors of Congress Beginning to intervene, thats the whole problem here. If congress if word gets out there that congress is willing to intervene and to create a 9 o gressive chapter bankruptcy system, then of ourse all of that is being eroded and no longer applies. Because if it can be reversed at any point then what does it begin with . I yield my time. Mr. Chairman, i want to address the argument that while the states are different in territories and this cant possibly apply, that chapter 9 cant possibly apply to a state. Well of course chapter 9 can be applied to states. Chapter 9 was specifically written for municipalities which are subdivisions of states. The only reason that chapter 9 has not applied to the states is because congress has never threatened to do so because doing so undermines the full faith and credit guarantees of their state constitutions. This measure makes clear that congress is now changed that status quo, that it is now willing to breach that faith and once we have done so full faith and credit is no longer an ironclad guarantee that your bonds will be backed by the full faith and credit of the issuing entity. The claim that this couldnt possibly happen ig no, sir the fact that it is already happening. As i stated, were watching the insurance instruments for state general Obligation Bonds already increasing just on the process of us taking this action. Six state governors have already issued wanchings that this will affect their states. And as i said i think the virnlen islands clearly understands the threat to their own debt of this measure and the spiraling interest costs that it will mean. So again, if you dont want to protect the full faith and credit of the state vote for this measure, but accept responsibility for the aftermath. Further discussion . Mr. Chairman, i know weve been at this for a while. But i think this is important enough that i want to speak on it as well. This needs to fail for the same reason the similar amendment failed. Were trying to play judge and jury. Were trying to decide among 20 plus classes of a bond holder here. And i understand the intent, but we simply are not equipped to adjudicate all of the different claims of all the different bond holders sitting in this room today. For example, very briefly, lets take a widow who happened to buy the very first general Obligation Bond that was issued in excess of puerto ricos constitutional limit because some bonds were sold in excess of what they were allowed. That widow bought her bond. Its one bond after it was constitutionally guaranteed. She thought she was buying a general Obligation Bond. And lets compare to her to a hedge fund. A hedge fund who bought four times removed a general Obligation Bond from somebody else. It was bought from puerto rico and then sold and sold and sold and a Hedge Fund Buys it. He wants to adjudicate the rights of those parties here and now by declaration. Its a mistake for us to do that. Let the control board apply the letter that weve laid down here in the bill that the respective rights of the parties have to be honored, and let them adjudicate. Let them certify claims that go to the court for further review. But lets not try to exclude nearly 20 of the bonds by fiat here in the Committee Room. Yeebled. Let me reiterate that i have to vote in opposition to this as well for the reasons he said. It goes too far in exempting an entire class which may or may not have been legally done and allows does not allow the Oversight Committee oversight, not control, Oversight Board to make that kind of adjudication. Is there further discussion . Any amendments . If not well vote. All in favor say aye. Opposed say nay. The nos have it. Roll call, please. Roll call. Is there anyone who hasnt voted . The clerk will report. Mr. Chairman, on this vote the yeas are 12 and the nays are 27. The amendment does not pass. Im going to ask at this point for the clerk to pass out all of the remaining ones that were filed late, specifically fleming 80, fleming 92, fleming 92, bishop 2 and fleming 91. The revised. And then as soon as that is done, i think mr. Labbeddor i think youre the next one. And labbeddor 042. No thats the next one well be doing. 6 the committee will come back to order. I recognize the gentleman fromive to explain the amendment. Without objection the amendment is considered as read. Thank you madam chair. My amendment is attempting to clarify language to require the fiscal plan to endeavor to provide for pension benefits projected to become due and payable during the plan. I will be withdrawing the amendment. I just want to put this on the record. As the bill curnly states, the fiscal plan is supposed to provide Adequate Funding of public pensions. That is what the pension is. I have not been able to get a real definition of what Adequate Funding means. I understand the history of this was the white house was attempting to protect the pensions like they were protected in detroit and we said no, which is what the intent of this committee is not to protect the pensions like they were protectd in detroit. So i just want to make it clear. My language was attempting to make it clear that what happened in detroit is not going to happen because in by the Oversight Board or in the boards. I have talked to a few experts who told me my language may be less clarifying than the language already in the bill. So thats why im withdrawing. But i have been assured by the author and the committee that some language will go into the report that will strongly stay, that we will not the Committee Report that will strongly state that our intent was to make sure that detroit does not happen in puerto rico. Because then we will have a bond crisis if thats what happens. As the bond experts have told us, what happened in detroit was an anomaly and thats why the bond market did not react to detroit because it was a onetime event. If the same thing happens in puerto rico then it will be a pattern and then the bond markets will react in a very the negative way and that will affect each one of our constituents. So with that in mind i will be wids drawing the amendment but i want to make sure that we have the strong statement in the report. Yield. The gentleman withstraws. The next amendment for our conversation is offered by mr. Bishop of utah. It is bishop number 2. I recognize myself for five minutes to explain the amendment and without objection the amendment is considered as read. This is a minor technical fix. It ensures the deal is protected. That deal has taken two years to negotiate. It reet rates and clarifies the purpose of paragraph 3. Which is to protect preexisting oluntary agreements. I ask for your support. Is there further discussion . The question is on the amendment. All in favor say aye. Those opposed no. The ayes have it and the amendment is agreed to. There are further amendments and i am going to return the chair to the chairman. Thank you vice chair. O the next one is 091 as revised. The revised 91. Mr. Fleming. I consulted with mr. Labrador that he supported 91 in the change of in the aspect supplied here changing the word respect to comply with. And therefore we have agreed upon this as a good substitute for my 91. And ask that it we make it in order and pass it. Is there further discussion . Mr. Chairman just for clarification purposes are we talking about amendment 91 . The revised version, which is just the first two lines on age 37 line 22 strikes inspects and puts comply with. I rise in opposition. My concern with this language is that it could be interpreted at meaning that you cannot restructure any of the general bligation bonded debt. And as i have stated before, it is one thing to say that were going to respect priorities and treat bond holders differently depending on the type of securities you are holding and their rights. Its quite in order to say they cannot be part of any restructuring. Everybody should be at the table and i anticipate that there will be differences in the treatment to all the bond holders or the classes of bond holders that puerto rico have. So again for the purpose of broad g that we have orderly legal restructuring of the debt owed by the puerto rico government instrumentalities i have to oppose this amendment. Yield back. Mr. Wittman. I would like to recognize the gentleman from louisiana dr. Fleming. I thank the gentleman for yielding. Again, the word respect is a weasel word here. It has no meaning. Simply put if you dont have the requirement to comply with those priorities then the general Obligation Bond holders have no priority whatsoever. They could slide to the bottom and pensioners slide to the top. Something all of us have a concern here that there would in fact be no meaning to a general Obligation Bond holders which is full faith and credit. So for that reason this bill this law should require that those priorities be fully put in place and complied with rather than at the last minute through some shell game be moved about. Just like we saw in the General Motors situation where priorities were turned upside down against law. I yield back. Mr. Chairman i yield back. Is there further discussion . Look, im going to weigh in with one word. Because, to be honest, i dont know what to do on this one. Originally i said this was can you believe. Im now being told we may have problems if it goes forward on the floor. So i dont know what im willing to do. I will be willing to work with you on this particular language. If its not adopted i will be working with you on this particular language. I think i am going to have to vote now simply because i dont know what im doing. The gentleman from louisiana i would be happy to support this if you would be willing to add at the beginning practicable. So to the extent practkble to comply with. I would be happy to vote if that provides any comfort. If the gentleman would yield, i think thats adding more adjustment language either it complies with the law in the constitution or it doesnt. And i would prefer to move forward. Is there further discussion . Mr. Chairman. I intend to vote for this because of the word relative. Relative is still in there. So it will say comply with the relative lawful priorities or lawful leins as may be applicable. So the word relative to me is relative to each other. So for that reason i believe that the amendment is ok. Any other discussion . All those in favor of the amendment say aye. Opposed say nay. The ayes have it. Is is there debate . Roll call. Roll call. Is there anyone who hasnt voted or wants to change . The clerk will report. Mr. Chairman on this vote the yeas are 16 nos 23. The amendment is not agreed to. But i would like to see if we can still explore Going Forward with this. Number 80. The next ones we have from herein are yours. O lets go with number 80. I think weve got three more to do. Right . Theyre all in flemings so lets go with number 80. Youre recognized. Mr. Chairman, thank you. As my staff and i researched got here, d how we it quickly became apparent that fishy. Ng was you see, puerto rico like other territories and states has a balanced budget requirement. Yet they continue to grow their debt in fishy. You an astronomicalcal rate that shouldnt be possible. It turns out that the english language constitution that Congress Approved requires that revenues match expenditures. In other words, their budget must balance each year. However, the Spanish Language translation of the constitution recursos, which means revenues. But the puerto rican government has interpreted it to more broadly mean resources. In some crazy stretch of imagination they count debt as a resource and therefore they are able to balance their budget, in quotes, by issuing more and more debt. This has to stop. My amendment would require puerto rico, the government to correctly interpret their constitution Going Forward. If they will not the Oversight Board and its restructuring authority will sunset after two years. This is more than reasonable because the Oversight Board is supposed to balance the puerto rican budget as part of the fiscal plan. So it should be a simple matter for puerto rican government to certify to the chair and Ranking Member of this committee that they will honor the balanced budget requirement in the puerto rican constitution Going Forward. If they cannot or will not then it is clear that puerto rico is not serious about keeping their fiscal house in order after the Oversight Board completes its work and we will end up right back here in the same place. Specifically, the amendment states that the government of puerto rico must certify to the appropriate congressional committees that they will honored the balanced budget requirement in article 6 section 7 of the puerto rican constitution and that they will not interpret this to include debt issued by the government of puerto rico. If they will not do these simple things then the authority of the Oversight Board will sunset along with its debt restructuring ability and we will have to negotiate a whole new approach. The requirement to interpret their constitution should have been a precondition for any congressional action. But this amendment seems like a reasonable compromise. I yield back. Is there further discussion . In opposition to this amendment, let me state that the financial situation of puerto rico is complex and messy. Achieving a balanced budget in two years that may not be realistic at all. If they fail to achieve a balanced budget this would abolish the Oversight Board and the entity task of achieving a balanced budget for the commonwealth. This amendment is not intended to be helpful. It is like other amendments designed to kill this legislation. Finally, i would note that the people of puerto rico dont need clarification of the interpret wation of their own constitution. They frankly need congress to take the necessary steps to ensure future financial stability. I would also note that a 2year limit in fact the budget proposed by the majority here dont balance within two years. Not even close to it. If thats the measurement that were using here, then obviously its not applicable to puerto rico, either. The amendment is not intended to achieve the goals stated. Its intended to kill the legislation. I oppose it and i yield back. I oppose the amendment and let me explain why. First of all, this legislation creates the board that is in charge of approving a longterm fiscal plan for puerto rico. At least five years worth of budgets and fiscal discipline. And one of the factors that the board is told it has to take into account is puerto ricos ability to balance its budget. It is one of the factors laid out. No fiscal plan will be approved by the board unless the government of puerto rico is balancing its books. It is as simple as that. Then the board as well is in charge of approving the budget of the government of puerto rico on a yearly basis. And ensuring that theyre prop lir balanced. So that is the boards job. And we should be expecting the board to do what is and trusted to do. Now, in terms of puerto ricos constitution, that is a matter for the Supreme Court of puerto rico to handle. The Supreme Court of puerto rico is the ultimate interpreter of our own constitution. And this language that you are laying out hasnt been ruled yet or held yet by the Supreme Court of puerto rico. So lets focus on the important thing. We wan