Can Trump Rescue Puerto Rico From Its Debt?: QuickTake Q&A

Few places were as financially ill-equipped to deal with a catastrophe as Puerto Rico. After years of losing residents as the economy staggered, the U.S. territory of 3.4 million residents collapsed into a record-setting bankruptcy in May and has stopped making payments on much of its more than $70 billion of debt. Then came Hurricane Maria on Sept. 20, which wiped out the already dilapidated electricity system, flooded cities and ruined crops. While humanitarian concerns are taking priority, the island’s bondholders, both on the island and mainland U.S., are watching and worried. President Donald Trump weighed in by suggesting Puerto Rico’s government debt would need to be wiped clean to help the island recover, causing bond prices to tumble to new lows.

Nothing official. After visiting the island on Oct. 3, he told Fox News: “We are going to work something out. We have to look at their whole debt structure. You know they owe a lot of money to your friends on Wall Street. We’re gonna have to wipe that out. That’s gonna have to be -- you know, you can say goodbye to that. I don’t know if it’s Goldman Sachs but whoever it is, you can wave goodbye to that.” Mick Mulvaney, director of the White House budget office, walked back the president’s comments on Wednesday, saying that the federal government wasn’t going to bail out the island, whose debts are already being dealt with under an emergency bankruptcy law enacted by Congress.