President Obama on Wednesday named seven people to a board set up by Congress to audit Puerto Rico’s finances and rescue the U.S. territory from $72 billion in bond debt it cannot pay.
The list was drawn from candidates in finance and academia who were recommended by congressional leaders.
“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,” Mr. Obama said.
Analysts say Puerto Rico’s financial troubles are the product of years of over-borrowing and spending and the steady exit of young, working-age residents who could turn its fortunes around.
States can permit their cities and utilities to seek bankruptcy protection under Chapter 9, yet Congress barred Puerto Rico from doing so decades ago because it is a territory.
House Speaker Paul D. Ryan and the Treasury pushed for Congress to step in and rescue the island, so a taxpayer-funded bailout wouldn’t be necessary down the road.
The bill, dubbed “PROMESA,” passed in late June despite vociferous objections from conservatives who said the legislation will end up stiffing the bondholders who bought the territorial government’s debt.
Some liberal lawmakers said the bill imposed colonial rule on average Puerto Ricans through its board, which will review the local government’s decisions and, if needed, petition for debt restructuring, should voluntary negotiations with creditors fail.
Treasury Secretary Jacob J. Lew thanked the members for “stepping forward” on behalf of the island’s 3.5 million inhabitants, though Rep. Luis Gutierrez, Illinois Democrat and vocal critic of the board’s creation, greeted the appointees with a warning — they must “renounce secrecy” by committing to recorded votes, disclosing who they meet with and posting their decisions in English and Spanish.
“We expect nothing less in a democracy and last I checked, Puerto Rico is a colony, but still a democracy of U.S. citizens who deserve respect and the trust of this appointed body,” he said.
Mr. Obama acknowledged those concerns Wednesday, saying the board will have to “work collaboratively” with the people and government of Puerto Rico “to build consensus for their decisions.”
“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,” he said.
According to the White House, the board members are: Andrew G. Biggs, a resident scholar at the American Enterprise Institute (AEI); Jose B. Carrión III, president and principal partner of HUB International CLC; Carlos M. Garcia, the CEO of BayBoston Managers LLC; Arthur J. Gonzalez, a senior fellow at New York University School of Law; José R. González, CEO and president of Federal Home Loan Bank of New York; Ana J. Matosantos, president of Matosantos Consulting; and David A. Skeel Jr., a professor of corporate law at the University of Pennsylvania Law School.
Mr. Ryan, Wisconsin Republican, said the appointments marked “another step forward” in the effort.
“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,” he said.
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