The Puerto Rico Financial Oversight and Management Board wrapped up the business of its first formal meeting on Friday in 25 minutes. The meeting had been scheduled to last an hour and a half.
In a session in which almost all words were read and there was little spontaneous conversation, the Board unanimously —
- Elected Jose B. Carrion III of Puerto Rico as Chair.
- Voted to exercise ultimate control over the finances of the Government of Puerto Rico, its retirement systems, all of its corporations, and the University of Puerto Rico.
- Asked that the governor of Puerto Rico provide a proposed fiscal adjustment plan for the entities by October 14th and that the governor or his non-voting, ex-officio representative on the Board, Richard Ravitch, personally present the plan at the Board’s next meeting in mid-October.
- Requested that the territorial government provide beginning the end of next month reports: weekly on cash-flow; monthly on bank accounts; monthly and year-to-date on its budget, revenues and collection efforts, payroll, Federal funds, and debt paid; and quarterly on agency performance and key financial and labor statistics.
- Agreed to engage an executive search firm to identify candidates for its key full-time personnel and established a committee for the hiring, including for its Executive Director, General Counsel, and Revitalization (Puerto Rico physical infrastructure) Coordinator.
The only extemporaneous remarks of significance made by a Board Member were spoken by Ana J. Matosantos of California, who is originally from Puerto Rico. The Board was interrupted by shouts from the audience, such as “Sounds like slavery to me!” by two or three people, at least one of whom was escorted from the Federal building room in New York City. A Facebook video of one protester’s remarks is available as of this writing; the speaker mistakenly refers to Puerto Rico as a “nation.”
Carrion, the new chair of the oversight board, is an insurance broker who served in the administration of the current governor’s predecessor as chair of the board that provides compensation to injured workers and a member of the board that provides compensation to automobile accident victims. The brother-in-law of Resident Commissioner Pedro Pierluisi, Carrion was appointed to the Board against the wishes of some Puerto Rico political leaders. He was recommended for appointment by U.S. House Speaker Paul Ryan (R-WI).
His election as chair was reportedly was not favored by Obama Administration Treasury Department officials, who were rumored to have favored Republican recommendee David J. Skeel Jr. or Democrat Arthur J. Gonzalez.
However, Nader Tavakoli, President and CEO of creditor company Ambac, was reported by Reorg Research as favoring the choice of Carrion, because he was born and lives in and does business in Puerto Rico. “He understands the issues intimately,” Tavakoli was quoted as saying, “and I think he will bring the right perspective to the problem and the solution.”
The differences of opinion over Carrion’s leadership are part of larger controversies over the fiscal oversight board, which was put into place as part of PROMESA, the law designed to help Puerto Rico recover from their debt crisis.
Objections have come not just from Puerto Rico’s political leaders, but also from some in the U.S. Congress, such as Elizabeth Warren (D-MA). “Will this Board speak for the [people] of Puerto Rico or the bankers?” Warren tweeted just before the board’s first meeting. “Today it met for the first time – not in PR, but NYC. That’s a bad start.”
Puerto Rico’s House Minority Leader Jenniffer González said in an interview with local news organization that the board’s first meeting “starts a new chapter in the history of Puerto Rico that while it brings nobody pride is a necessary step to re-establish the credibility of the Puerto Rico government.”
González emphasized the importance of Governor Garcia Padilla’s cooperation with the board. “The requested information should be delivered faithfully and promptly,” she said, referring to a fiscal turnaround plan that with an October 14 deadline. González also demanded that the plan reject a reduction in minimum wage for those below age 25, a value-added tax, and the imposition of other new taxes.
Gov. Garcia Padilla announced that he would submit the fiscal plan in two weeks.
Meanwhile, an article by Agustin Santiago in El Vocero reminds readers that “We can not trust that our problems will be solved by way of the decisions taken by the Fiscal Control Board from PROMESA or or by the people who are elected in the next elections. As noted some time ago by Senator Ron Wyden at a hearing of the Senate Committee on Natural Resources, ‘if the status issue is not resolved, it’s only a matter of time before we will be back here with the same problem.'”