(CNN)A number of potential 2020 Democratic presidential contenders are behind a bill that would allow Puerto Rico to terminate its $73 billion in debt.
Warren, Sanders introduce debt relief bill to benefit Puerto Rico
Sens. Elizabeth Warren, a Massachusetts Democrat, and Bernie Sanders, a Vermont independent, introduced a bill Wednesday that would give the US territory a way out of its crushing debt crisis exacerbated by the damage from Hurricane Maria in 2017.
The US Territorial Relief Act of 2018 includes as cosponsors two other Democratic senators mentioned as prospective 2020 candidates: Kamala Harris, from California, and Kirsten Gillibrand of New York.
Rep. Nydia Velázquez, D-New York -- the first Puerto Rican woman elected to the House -- plans to introduce companion legislation in the House.
The relief act aims to allow US territories to "terminate their public, unsecured debt" if they meet two of the following criteria: population decrease of 5% over 10 years, received major federal disaster assistance and per capita debt going beyond $15,000. Puerto Rico qualifies under these criteria.
"Puerto Rico was already being squeezed before Hurricane Maria hit, and will now have to rebuild under the weight of crushing debt," Warren said in a news release on the bill Wednesday. "Our bill will give territories that have suffered an extraordinary crisis a route to comprehensive debt relief and a chance to get back on their feet."
The senators propose that Puerto Rico's governor and Legislature approve the debt relief, since Puerto Rico is a self-governing territory. The bill would then designate a "special master" to allocate $15 billion to creditors Puerto Rico owed. The bill would not extend to bond insurers, large financial firms and hedge fund investors.
"Disaster funding and the other resources in struggling territories' budgets must not go to Wall Street vulture funds who snapped up their debt," Warren said.
Under the bill, eligible US territories would be allowed the option to terminate their debt only once every seven years.
The measure would also create a commission to do an audit of the causes and sources of Puerto Rico's debt.
The Caribbean island has been in an economic recession for over a decade and in May 2017 it filed for bankruptcy, the biggest municipal bankruptcy filing ever in the US.
Four months after filing for bankruptcy, Puerto Rico was hit by the strongest storm the island has seen in 85 years: Hurricane Maria.