‘Morcillas de’ Promesa
Laws, like morcillas—the tasty blood sausages we so love during our endless—Navidades—are the product of secret confection best left to the imagination because there is nothing pretty about the process that goes into their creation. That age-old adage remains true to this day.
If anyone has any questions, please take a look at the drafting of the Puerto Rico Oversight, Management & Economic Stability Act (Promesa); the law aimed at rescuing Puerto Rico from the depths of depression is actually a roadmap for debt restructuring.
To make really tasty morcillas, there is intestinal gutting, rice put through the ringer and packed with blood—it is not for the faint of heart. The same is true of the legislation that intends to restore Puerto Rico’s credit. There is no Credit Karma here.
Truth be told, Promesa is the result of a confluence of events that started much as Donald Trump’s run for presidency—as a ruse that would never come to fruition. As pertains to Promesa, a process that began as a perfunctory exercise in “let’s play to our Hispanic constituencies”—there was little chance that a dysfunctional Congress would pass a bill so tarnished with the veneer of bailout—slowly made its way through the gauntlet of partisanship.
A run of improbable events took place, the Freedom Caucus got behind U.S. Rep. Raúl Labrador (R-Idaho); the lobbyists for the general-obligations debt bondholders were reassured that their sterling credit would have some degree of priority once the Promesa ball got rolling; and Senior Cofina (Spanish acronym for Sales Tax Financing Corp.) debtholders were reassured that their tax-backed credits would not be thrown into a big garbage tranche.
Lo and behold, Promesa made it to a committee vote—this despite House Speaker Paul Ryan invoking the Hastert Rule. That informal parliamentary ploy, named after former Speaker of the House Dennis Hastert, calls for legislation to be presented for markup only if the speaker believes he can pass the measure when it goes to the floor with a majority of the majority. Few people on Capitol Hill thought there was any chance of that happening. In that sense, Promesa was like penicillin, it happened almost by accident—the question now is how will Puerto Rico benefit?
There are some very serious people in the GOP who are well-acquainted with Puerto Rico politics—unfortunately, we can count them on one hand—who believe that Republicans are being naïve in the selection of the Financial, Oversight & Management Board’s members.
How is it that the only people who can cut muster by this board’s standards are people like Carlos García, whose selection by Ryan is being questioned because the former Government Development Bank president helped engineer bond emissions that are coming due? Then there is the naming of Bill Cooper as the board’s executive director, which has been lauded by the private sector and railed against by some in the GOP because of the potential for blowback by the environmental sector.
The next order of business is the selection of the Junta’s chairman; chatter in the hallowed halls of Congress is that José Carrión III will be selected. He, in turn, is reportedly inclined to confirm Cooper as the executive director.
From there it is on to pick the revitalization coordinator, who is chosen by the governor from a list of at least three names submitted by members of the board. That post will wield considerable power in demanding that fast-track rules are followed in permitting for infrastructure projects deemed critical. Cooper had much to do with the language in Promesa enabling expedited permitting. Ojo.