They absolutely need this if they want to avoid being raped and pillaged by the bankers:
IOWA CITY, Iowa (Reuters) – U.S. Democratic presidential hopeful Hillary Clinton on Tuesday joined calls for changes in U.S. bankruptcy laws that would enable Puerto Rico’s public entities to restructure some $72 billion in debt.
In Washington, two Democratic senators hope to move forward within weeks with legislation in Congress that would allow the U.S. territory to restructure debts in bankruptcy court, instead of risking chaos.
Governor Alejandro Garcia Padilla of Puerto Rico dropped a bombshell on debt holders a week ago by saying he wanted to restructure debt and postpone bond payments. He urged changes to U.S. bankruptcy laws that currently exclude Puerto Rico.
Like U.S. states, Puerto Rico cannot file for bankruptcy protection. But Puerto Rico’s public entities do not have the ability of U.S. municipalities to enlist Chapter 9 of the U.S. Bankruptcy Code to restructure their debt.
The problem with this is that bankruptcy generally means that these states and cities etc get to screw their retirees out of their pension obligations (which they underfunded so they could cut taxes) and the politically connected creditors will get to be made whole, or a lot more whole than anyone else.
Another thing we could do is repeal the bankruptcy law that was signed, I believe, by the 42nd president, and reinstate Glass-Steagal, also signed by him.