Now in Place: A Powerful Federal Oversight Board

The Obama administration announced Wednesday (August 31) the members of the federal oversight board established by the Puerto Rico Oversight, Management and Economic Stability Act, aka PROMESA. The seven members of this board are charged with mapping Puerto Rico’s path forward.
As we wrote when PROMESA was passed, the establishment of this board has the potential to be the Act’s greatest strength.
Four members of the board were on lists developed by the Republican leadership in Congress, two were on lists developed by the Democratic leadership in Congress and one was chosen by the President himself. The President selected six members from the legislative lists.
The members chosen from the Republicans’ lists are as follows:
  • Andrew G. Biggs, who is a resident scholar at the American Enterprise Institute (AEI), a non-partisan public policy think tank. Biggs, who in 2014 was named one of the 40 most influential people in the retirement world by Institutional Investor magazine, studies Social Security reform, state and local government pensions, and public sector pay and benefits, according to the AEI website. He served in the Social Security Administration from 2003 to 2007, rising to principal deputy commissioner. He was the director of research at the Congressional Institute, a Social Security analyst at the Cato Institute, a staff member on the President’s Commission to Strengthen Social Security in 2001, and the associated director of the White House’s National Economic Council in 2005.
  • Jose B. Carrión III is the president and principal partner of Hub International CLC, a San Juan-based subsidiary since 2012 of the Chicago-based insurance brokerage Hub International Limited. He was a founder and president of Carrión, Laffitte & Casellas (CLC), which was established in 2001 as an independent insurance brokerage. Earlier in his career, Carrión worked at AON Risk Services of Puerto Rico, rising to the position of president, and served as the chairman of Puerto Rico’s workers compensation board. He has also served as a board member of the Commonwealth’s public auto insurer, according to the White House announcement. Carrion, a bankruptcy professional, is based in Puerto Rico.
  • Carlos M. Garcia, currently the managing partner of BayBoston Capital, a private equity firm, was the president, CEO and chairman of the Government Development Bank of Puerto Rico (the GDB) during the administration of Luis Fortuño. The governor relied on him to lead the Fiscal Reconstruction and Stabilization Board, which worked to reduce government spending, restore credit ratings and stabilize the Commonwealth’s finances via the Public-Private Partnership Act and the 2006 securitization of sales-tax revenues (COFINAs). Earlier in his career, Garcia worked at Credit Suisse First Boston and later held various executive positions at Popular Securities, Santander Securities, Banco Santander Puerto Rico, Santander BanCorp, Sovereign Bank and Santander Holdings USA. He has served as a director on several corporate boards and is a member of the board of the Make-A-Wish Foundation and the Hyde Square Task Force. According to Wikipedia, Garcia was the captain of the University of Pennsylvania’s tennis team, received all Ivy academic honors and runs marathons.
  • David A. Skeel Jr., the S. Samuel Arsht Professor of Corporate Law at the University of Pennsylvania Law School, has written extensively about bankruptcy, corporate law, financial regulation, Christianity and the law, among other topics, according to the Penn Law website. Earlier in his career, Skeel was an assistant and then associate professor of law at Temple University and a visiting professor at Georgetown University and the universities of Virginia and Wisconsin. He is also a member of the American College of Bankruptcy, an invitation-only organization whose members are “professionals who have distinguished themselves in their practice and in their contribution to the insolvency field,” and the European Corporate Governance Institute.
The remaining members – two chosen from the Democrats’ lists and one chosen by President Obama himself – are as follows:
  • Arthur J. Gonzalez, currently a senior fellow at New York University Law School, served as Chief Judge of the U.S. Bankruptcy Court for the Southern District of New York from 1995 until his retirement in 2012. In that capacity, he presided over the bankruptcy hearings related to the reorganizations of Enron, WorldCom and Chrysler, among others. Gonzalez taught in the New York City school system for 13 years before beginning his career as a lawyer. Before joining the court, he was a staff attorney at the Internal Revenue Service and had a private practice. He also served as a U.S. Trustee for New York, Connecticut and Vermont and an assistant U.S. Trustee for the Southern District of New York. In July 2016, Gonzalez was included on the list of “the most influential bankruptcy judges in history,” as compiled by Law360, a subscription service that sees itself as a “one-stop source for legal news and analysis.” In a New York Times profile written in late 2011, Gonzalez was described by an Enron lawyer as having “a demeanor that exuded fairness” and being someone who could write “brilliant decisions at a fairly rapid clip.” The article also noted that he was marathoner, a triathlete and a participant in the annual 86-floor sprint to the top of the Empire State Building.
  • José Ramon González, the CEO and president of the Federal Home Loan Bank of New York (FHLBNY), was the president of the GDB during the administration of Rafael Hernández Colón. González later held executive positions at Credit Suisse First Boston (Puerto Rico), MOVAPharmaceutical Corporation, Santander Securities Corporation, Banco Santander of Puerto Rico, and OFG Bancorp (aka the Oriental Financial Group). González holds an M.B.A. and J.D. from Harvard University, has practiced law in Puerto Rico, and has served as vice chairman ofFHLBNY and Santander. According to its website, FHLBNY “helps community lenders in New Jersey, New York, Puerto Rico and the U.S. Virgin Islands advance housing and community growth.”
  • Ana J. Matosantos, who was director of the California Department of Finance for Governors Arnold Schwarzenegger and Jerry Brown, works as financial and budget consultant for the Public Policy Institute of California (PPIC), a nonpartisan research organization that defines its mission as “providing essential information and framing policy debates to shape a better future for California.” She currently serves on the PPIC’s statewide leadership council. Matosantos has worked in the Office of the Governor on healthcare reform and was a member of the state’s Health and Human Services Agency. She also held positions in the state Senate as a consultant to its Health and Human Services committee and its Budget and Fiscal Review committee, according to her PPIC bio. In her role as Gov. Brown’s top budget advisor, she was integral to California’s reversal of fortune. When Matosantos announced her retirement in 2013, Bill Lockyer, the highly respected state treasurer, issued the following statement: “As the state has dug itself out of the deepest of fiscal holes, no one has done more shoveling than Ana. No one deserves more credit.”
It is not clear which of these three was President Obama’s personal choice.
The members of the oversight board have been appointed for 3-year terms.
Additionally, the governor, who could have served as a non-voting member of the board or appointed someone in his place, announced that Dick Ravitch would be his appointed representative. Ravitch, a lawyer, real estate developer and, for a short time, the lieutenant governor of New York, has had many government and government-appointed positions throughout his career. In the 1970s, he helped New York City right its sinking fiscal ship, and he was credited with rescuing the city’s Metropolitan Transportation Authority when he served as its chairman.
In naming Ravitch as the non-voting member of the oversight board, Gov. Alejandro García Padilla noted that Ravitch has offered assistance to Puerto Rico without compensation during the past 3 years. Ravitch’s term may be short lived given that Gov. Padilla is not running for re-election this November. The new governor may choose to take the non-voting role for himself, may retain Ravitch or may appoint a different representative.
As we wrote in our earlier post about PROMESA, we are cautiously optimistic that Puerto Rico – under the oversight of a federal control board – will embark on a path of fiscal and economic reforms that enable it to grow, to provide for its inhabitants, to re-establish access the capital markets and to meet its obligations to its creditors.
Read our Puerto Rico Roundup for earlier posts about the Commonwealth, and follow @RochesterFunds for more muni-related news and commentary.
The latest installment in our series “Current News on the Commonwealth of Puerto Rico”

Now in Place: A Powerful Federal Oversight Board

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