Puerto Rico Oversight, Management, and Economic Stability Act

Floor Speech

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Mrs. LUMMIS. Mr. Chairman, we saw a bunch of ads on TV about this bill and about what it would do to the bondholders. So I did some research.

I rise in support of this bill as one of the more conservative members of the Republican wing of this House. The reason I support it is the research I did showed me that it wasn't this widow that bought these bonds, it was large institutional investors. It was investors who knew what they were buying because they read the disclosure documents. It was investors who buy billions of dollars worth of bonds, and they are trying to diversify those portfolios, so they have some high-risk, high-return investments and some low-risk, low-return investments. They have different maturity dates. They come from different jurisdictions. They are trying to have a balanced portfolio. Those portfolios were purchased recognizing that some of these bonds might have a higher risk and a higher return. That higher return comes at a discounted price. So they paid a discount in hopes that they would get the higher return and that these bonds would hold up.

Quite frankly, those bondholders knew what they were getting because it was even disclosed in the bond documents that Congress might be here today debating this very problem of the island's inability to repay everything.

Not all general obligation bonds are created equal. The bond purchasers knew what they were getting. This bill is going to allow for the relative-to-each-other agreement among the bondholders about how to treat the bonds.

Mr. Chairman, I fully support the bill.

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