President Donald Trump named a former representative of Puerto Rico bondholders to the Oversight Board late on Wednesday.
Trump appointed Justin Peterson, who worked for several years as a spokesman for the Ad Hoc Group of General Obligation Bondholders in the Puerto Rico bankruptcy.
Peterson held the position as a professional at DCI Group, a major Washington, D.C. publicity firm that specializes in representing creditors. He is currently managing partner of the firm.
"It's exceptionally positive that President Trump has appointed a new [board] member who understands the statutory purpose of [the Puerto Rico Oversight, Management, and Economic Stability Act] is to return Puerto Rico to 'fiscal responsibility' and hopefully working consensually with creditors," said Puerto Rico commentator Cate Long. "My understanding is that Justin Peterson replaces Judge Arthur Gonzalez who has championed a scorched earth approach to debt restructuring which is in contradiction to the statute and damaging to the island's access to credit markets."
A U.S. representative saw it differently. “Once again, the president is using his powers to undermine the interests of the people of Puerto Rico,” said U.S. Rep. Nydia Velázquez, D-N.Y. “Just weeks before the election, Trump has made an appointment that could impact the lives of Puerto Ricans for decades.
“In appointing Peterson, this administration has made clear it favors pursuing interests of bondholders over the wellbeing of the Puerto Rican people,” Velázquez said. “I oppose an appointment that would further force austerity measures on the island in favor of boosting Wall Street.”
Puerto Rico Oversight, Management, and Economic Stability Act specifies that there are seven members of the Oversight Board. Three members have recently left the board and four members continue to serve. However, all seven seats are up for appointment right now.
The president of the United States gets to appoint one of them at his or her own discretion.
According Long, former President Barack Obama used his discretionary appointment to appoint Arthur Gonzalez to the Oversight Board, where he continues to serve as a member. Trump has chosen Peterson as his discretionary appointment.
So unless other members of the Congressional leadership, who have a say in appointing the board members, appoint Gonzalez, he will not be continuing on the board. Gonzalez’s background is as a bankruptcy judge.
The Ad Hoc Group of GO Bondholders was one of the first creditor groups formed to represent the interests of Puerto Rico creditors in the bankruptcy. It remains one of the most active groups in the legal process around the central government bonds.
“President Trump’s selection of Justin Peterson to join the Financial Oversight and Management Board reminds us that the White House and its allies will never prioritize debt relief for the government of Puerto Rico and the residents of the island," House Natural Resources Chairman Raúl Grijalva, D-Ariz., said. "For the past four years, the administration’s approach has led to essential public services being dismantled, more people leaving the island, and projections of even higher energy costs, all of which hurt the economy. This appointment is doubling down on that failure, and it’s not in the best interest of Puerto Rico.”
