Tuesday, October 15, 2019

CofC: A Trump-aligned fiscal board would ease flow of Puerto Rico recovery funds

By on February 22, 2019

SAN JUAN – As far as Puerto Rico House Minority Leader Rafael Hernández is concerned, the U.S. First Circuit Court of Appeals’ ruling shows that the island can remain under its bankruptcy-like process without the need for a financial oversight board meddling in its local affairs.

A recent ruling declared the island’s Financial Oversight and Management Board was unconstitutionally appointed because its members were not approved as per the  Appointments Clause, which stipulates that the U.S. president nominate, and by and with the advice and consent of the Senate, appoint the members.

“If that ruling proved something, it’s that part of the law could be declared unconstitutional and the rest of it can stay the same way. We still have a debt and access to the regulatory framework to handle it,” the lawmaker said after participating in the Puert Rico Chamber of Commerce’s third forum on the Puerto Rico Oversight, Management, and Economic Stability Act (Promesa). “The theory espoused by everyone that if the board went away, Puerto Rico would collapse, did not happen,” he added.

Promesa established a different method of appointments, whereby congressional leaders also appointed members. After its analysis, the Boston court concluded that the fiscal board’s members were federal officers. The ruling gave President Trump 90 days to correct the situation. The rest of Promesa was upheld, including its bankruptcy provisions.

Hernández said the time was ripe for Puerto Rico to seek the help of all sectors for the removal of the fiscal board and represent itself in Promesa’s Title III bankruptcy process. Much of the criticism against the board has centered around its power to effect local decisions.

Hernández said the board’s executive director, Natalie Jaresko, said the panel sees itself as having more of an administrative role, and that while Chairman José Carrión agrees with that view, there is a difference between action and words. He said Carrión has become more of a “non-elected official” who is trying to establish public policy.

“If he wants to run for governor, then he should do so within a political party…but not in an undemocratic manner, trying to establish public policy,” he said.

Senate Minority Leader Eduardo Bhatia, who participated in a panel discussion, titled “How Promesa affects Democracy,” said the board has eroded the island’s democratic processes and, as a result, the island’s economy.

“My argument is that one cannot have economic development, one cannot have economic stability without democratic stability,” Bhatia said.

Meanwhile, majority New Progressive Party Sen. Carmelo Ríos said the board, “as it is designed, does not work,” adding that the ruling by the First Circuit court will force Congress to deal with Promesa’s inherent issues.

“Until recently, we thought this supreme organism could not be challenged, but now we see its vulnerability. For the first time, Congress does not have an excuse not to deal with them,” he said.

Chamber of Commerce President Kenneth Rivera, whose organization was one of the Promesa Forum sponsors, said Washington officials have not asked the CofC to propose names for the board. Under the court ruling, Trump could ratify the current board members, whose appointments end in September, or appoint new ones.

CofC President Kenneth Rivera (CB/Eva Lloréns Vélez)

“We are going to Washington in two weeks to deal with other matters, but I imagine they will seek input from the private sector. However, the question that should be asked is whether current board members want to be renominated, which [is something] I don’t know. There have been different names that have popped up on the internet but I doubt the president has had time to think about this in a serious fashion,” he said.

 

The court ruling does not say what would happen if Trump does not appoint anyone to the board after the 90 days are up. Rivera, however, believes that if Trump appoints a board that is more akin to his way of thinking, federal funds for Puerto Rico’s reconstruction will be released faster than they currently are.

Rivera said that while the board has done certain things well and others poorly, such as not defining which are the government’s essential services, his biggest concern is it has failed in establishing a healthy collaboration with the government of Puerto Rico and instead has developed an “antagonistic relationship” with the local government.

“You have to learn to work with other people,” he added.

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