Puerto Rico’s Debt Crisis and the 1975 Law Complicating Matters
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Senator John Tower’s 1975 bill to help resolve a Constitutional disagreement let state and local governments sell bonds with less federal scrutiny. CreditGeorge Tames/The New York Times
To appreciate why it is proving so hard for Washington to help debt-burdened Puerto Rico, it helps to go back to 1975, the year New York City went broke, and consider the role played in that crisis by a prominent Republican senator from Texas named John Tower.
Fearing more financial failures in other municipalities, federal securities regulators wanted Congress to force states and cities to provide truthful financial information about bonds they were going to sell to raise money. But cities were having none of it, instead rallying around the Constitution’s separation-of-powers doctrine. The fight was resolved by Senator Tower, the first Texas Republican elected to the Senate since Reconstruction. He introduced a bill that kept the feds at bay…
Puerto Rico’s Debt Crisis and the 1975 Law Complicating Matters
