Under PROMESA,the Puerto Rico Oversight, Management, and Economic Stability Act passed by Congress in 2016, a Fiscal Oversight and Management Board (FOMB) was created. The FMOB’s goal, as recently set forth by FOMB Chairman José B. Carrión III, in separate letters to Puerto Rico Governor Ricardo Rossello and congressional leaders is “to help Puerto Rico achieve fiscal balance, provide a path for its return to the capital markets, and restore economic growth and opportunity.”
In both letters, Chairman Carrión, recognized that “the complex restructuring proceedings are costly, and the situation facing Puerto Rico guaranteed that it would be so,” but he added that “there is a structural factor at play that has made the costs excessive.”
Carrión acknowledges in his letters that the costs have been “extraordinarily expensive,” and he has an explanation. In his view, the FOMB, as “the legal representative of any debtor in the Title III proceedings,” hires attorneys and “other advisors” — and so have PREPA and the Puerto Rican government.
While Carrión accepts that Puerto Rico and PREPA have a right to hire their own lawyers, the letter points out that work has been duplicated, as have costs. “We write to urge you to cooperate with us in this endeavor,” he wrote.
Carrion also wrote to the Majority and Minority Leaders of the Senate, Mitch McConnell (R-KY) and Chuck Schumer (D-NY) respectively, and Speaker of the House Paul Ryan (R-WI) and Democratic Leader of the House, Nancy Pelosi (D-CA).
In his letter to the congressional leaders, Carrion left out the request for cooperation and inserted an additional sentence in the paragraph, making it clear that the board sees Puerto Rico government’s cooperation as necessary to solve the problem:
We write to apprise Congress that as long as this structure remains in place, the FOMB endeavors to find more ways to work more efficiently with the Commonwealth’s and its instrumentalities’ advisors so as to minimize the amount of duplicative, unnecessary work and therefore reduce fees in the Title III proceedings. To underscore this commitment, we have also sent a letter to the Governor of Puerto Rico, urging him to cooperate with us in this endeavor.
The letters follow remarks by Judge Laura Taylor Swain saying that the people of Puerto Rico cannot afford to spend “billions of dollars” on professional fees.
Read the letters: