UPDATE 3-U.S. Treasury helped craft plan to protect Puerto Rico pensioners over bondholders -document, sources
(Adds Treasury comment, link to document, more information from sources regarding source of plan)
By Nick Brown and Megan Davies
SAN JUAN/NEW YORK Feb 25 (Reuters) - The U.S. Treasury worked with Congress on a plan last year which envisioned giving Puerto Rico's pensioners stronger legal protection than holders of its constitutionally backed bonds if it went bankrupt, according to sources and a draft of the proposal obtained by Reuters.
The draft, circulated in Washington late last year but not made public in the run-up to President Barack Obama's Omnibus budget, imagined a broad structure aimed at protecting citizens while providing flexibility to cut debt, an approach consistent with what Puerto Rico's leaders have sought.
For a link to the document: tmsnrt.rs/21kkMg2
One source familiar with the document said it represented what administration officials, including those at Treasury, had proposed to potentially include in the Omnibus bill. A second Congressional source said the plan was the product of talks between Treasury and senators from both parties, although it was unclear who actually wrote it and Republicans ultimately did not use the language.
However, a Treasury spokesman said the administration had not "prescribed a particular approach" but would work with Congress to review legislation that emerges.
Treasury put forward a proposal in October which did not include draft legislation, the spokesman said, without confirming the authenticity or origin of the document seen by Reuters.
"As part of our standard practice, the Treasury Department has also provided technical assistance to congressional staff in the drafting of various forms of potential legislation, ahead of the March deadline for Congressional action," the spokesman said. Continuación...