After Outrage on Wall Street the White House Begins Rescinding Trump's Big Promise to Puerto Rico
On Tuesday night, President Donald Trump casually told Geraldo Rivera on Fox News that the United States would have to wipe out $75 billion in debt owed by Puerto Rico to bondholders around the world.
Wall Street promptly freaked out, sending Puerto Rican bonds into a tailspin and leading the White House to move swiftly to clean up Trump's seemingly offhand remarks.
On Wednesday, the Trump administration indicated it has no current plans to take the unprecedented, politically dangerous and probably illegal step of wiping out the owners of Puerto Rico's bonds in the wake of Hurricane Maria's devastation. Trump’s own budget chief quickly walked the president’s comments back.
“I wouldn’t take it word for word with that,” OMB Director Mick Mulvaney said on CNN. “We are not going to deal right now with those fundamental difficulties that Puerto Rico had before the storm.”
Added Mulvaney: “Puerto Rico's going to have to figure out how to fix the errors that it’s made for the last generation on its own finances.”
Numerous senior administration officials and a White House spokesman did not respond to requests on Wednesday morning for further comment on Trump’s remarks.
Mulvaney was cleaning up after a remarkable Trump interview that sent Wall Street bond traders and holders of Puerto Rico’s debt scrambling overnight Tuesday. The island’s general obligation bonds dropped from 56 cents on the dollar to just 36 cents early on Wednesday as investors tried to figure out exactly what the White House might actually do.