WASHINGTON – President Obama formally announced the seven members of the oversight board that the PROMESA law established for Puerto Rico, drawing praise from lawmakers and market participants.
But the announcement came as Puerto Ricans protesting the oversight board shut down the area around a hotel in San Juan that was hosting a conference on PROMESA.
In a release sent out early this afternoon, Obama listed the names of the board members, four of whom were chosen by Republicans and three of whom were Democrats' choices.
The seven-member board will have the power to require balanced budgets and fiscal plans, as well as to file debt restructuring petitions on behalf of the struggling commonwealth and its entities in a federal district court as a last resort if voluntary negotiations with creditors fail.
The Republican-chosen members are: Andrew Biggs, an expert on state pension funding and a former trustee of the Social Security Administration; David Skeel, a professor at the University of Pennsylvania who has focused on bankruptcy laws in relation to creditors; Jose Carrion III, a Puerto Rico based bankruptcy professional who has an extensive history with Puerto Rico's workers compensation system and other insurance vehicles in the commonwealth; and Carlos Garcia, who has close ties to the administration of former Puerto Rico Gov. Luis Fortuno and has advocated for reform of the commonwealth's Government Development Bank.
The members chosen by Democrats are: Jose Ramon Gonzalez, a former commonwealth banking executive and current chief executive officer of the Federal Home Loan Bank in New York; Arthur Gonzalez, a former chief judge of the U.S. Bankruptcy Court for the Southern District of New York; and Ana Matosantos, a former senior advisor to California Govs. Arnold Schwarzenegger and Jerry Brown on budget policy.
"With a broad range of skills and experiences, these officials have the breadth and depth of knowledge that is needed to tackle this complex challenge and put the future of the Puerto Rican people first," Obama said in the release. "The task ahead for Puerto Rico is not an easy one, but I am confident Puerto Rico is up to the challenge of stabilizing the fiscal situation, restoring growth, and building a better future for all Puerto Ricans."
House Speaker Paul Ryan, R-Wis., said the announcement today marks another step forward in the reform of Puerto Rico. Ryan played a key role in moving the PROMESA legislation through Congress despite numerous concerns from legislators on both sides of the aisle.
"Drawing from a wide variety of practical experiences and policy prowess, the members have what it takes to serve Puerto Rico and help get the territory on a path to fiscal health," Ryan said.
David Popp, a spokesperson for Senate Majority Leader Mitch McConnell, R-Ky., said that "Puerto Rico must get its finances in order to recover from its crisis" and that the "control board will be crucial in providing expert, impartial oversight and guidance to help Puerto Rico achieve a healthy balance sheet." McConnell provided Obama with a list of names that included one of the president's ultimate choices for the board.
Resident Commissioner Pedro Pierluisi, Puerto Rico's nonvoting member of Congress, said he believes that the board and others, using PROMESA's framework, will start Puerto Rico's turnaround.
"Success will require hard work and sacrifice. But nothing truly worth doing in life is ever easy," Pierluisi said.
Reps. Nydia Velazquez, D-N.Y., and Jose Serrano, D-N.Y., both said they see the appointments as a step forward and hope the board will now successfully work to find solutions to the commonwealth's fiscal problems.
David Bernier, the gubernatorial nominee for Puerto Rico's Popular Democratic Party, took a more hostile view of the announced appointments.
"We oppose the board because we understand that it lacerates our own government and is anti-democratic," Bernier said. "Given the reality of PROMESA, we will defend the interests of our people always before the board or any forum necessary so that what prevails is the welfare of Puerto Rican families."
Treasury Department Secretary Jack Lew commended the oversight board members "for stepping forward to serve the 3.5 million Americans in Puerto Rico." Lew and Treasury have taken the lead for the Obama administration in working to address Puerto Rico's fiscal crisis.
Analysts largely view the board as a positive development for Puerto Rico's creditors, who had been concerned that they would receive significant haircuts on their investments as the commonwealth's economy deteriorated.
Daniel Hanson, an analyst with Height Securities, said he and the firm believe "that creditors will benefit from the strongly technocratic selections proffered from the White House."
Matt Fabian, a partner with Municipal Market Analytics, said the board appears "poised to be critical, analytic, and technical, implying an interest in creating a recovery plan quickly without strong-arming a particular ideological point of view."
"That being said, it's unclear that the board will be prepared to deal with the deteriorating politics on the island, which threaten to hinder the creation of a consensual plan or even the existence of consensual negotiations," he added.
Fabian, a keynote speaker at the conference in San Juan who was trapped in the hotel by protesters, also said it is important to recognize that this is the first board under PROMESA and that there may be new members over time as perceived needs for Puerto Rico's recovery shift. For example, he said these members are strong choices for short-term recovery but may not be the right choices if the board wants to eventually pivot to long-term economic strategies.
