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Congress Gives Puerto Rico a Path Forward as Debt Default Nears

  • Obama to sign measure as governor says bonds won’t be paid
  • Bill gives commonwealth ability to force debt restructuring
SAN JUAN, PUERTO RICO - JULY 01: The Puerto Rican flag flies near the Capitol building as the island's residents deal with the government's $72 billion debt on July 1, 2015 in San Juan, Puerto Rico. Governor of Puerto Rico Alejandro García Padilla said in a speech recently that the people of Puerto Rico will have to make sacrifices and share the responsibilities to help pull the island out of debt.

SAN JUAN, PUERTO RICO - JULY 01: The Puerto Rican flag flies near the Capitol building as the island's residents deal with the government's $72 billion debt on July 1, 2015 in San Juan, Puerto Rico. Governor of Puerto Rico Alejandro García Padilla said in a speech recently that the people of Puerto Rico will have to make sacrifices and share the responsibilities to help pull the island out of debt.

Photographer: Joe Raedle/Getty Images
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Puerto Rico’s fiscal crisis is reaching a turning point as President Barack Obama plans to sign bipartisan legislation that would allow the island to escape from debts Wall Street once viewed as ironclad.

The Senate, in a 68-30 vote Wednesday, passed a bill that protects the island from creditors as it veers toward its largest default yet. The legislation creates a financial control board to help restructure Puerto Rico’s $70 billion in debt and oversee the island’s finances, marking the largest federal intervention ever into the U.S. municipal bond market.