Fiscal board publishes first report on Puerto Rico’s debt

SAN JUAN – Puerto Rico’s financial control board published Monday the first report on the investigation underway by law firm Kobre & Kim into the commonwealth’s debt.

“The Independent Investigator has identified potential witnesses, subjects, and targets, and causes of action, and is working to preserve relevant evidence,” reads the document dated Oct. 30.

The report states that 84 notifications of document preservation have already been sent in relation to public debt issuances made in the past 20 years. Issuing entities, advisers, credit rating companies and underwriting institutions, among others, have received them.

Puerto Rico fiscal board picks public debt ‘investigator’

Of the 84 notifications, 79 “witnesses” confirmed they have already taken measures to preserve the documents, as requested by the investigator.

“In sum, a large majority of the witnesses have expressed a willingness to cooperate in the investigation, and produce documents and information on a voluntary basis,” Kobre & Kim says in its report.

However, the document mentions that, on Oct. 27, subpoenas for information were issued for Popular Inc., Popular Securities and Banco Popular de Puerto Rico. The report does not detail what documents are required of the financial institution.

Kobre & Kim was retained on Sept. 1 to investigate all the factors that triggered the fiscal crisis in Puerto Rico, as well as all public debt transactions the government has made, as requested by the board. This includes the practices employed in the purchase and sale of Puerto Rico and its public corporations’ bonds, and the associated disclosures to market participants.

On Oct. 18, the board turned the probe into a formal procedure, as defined by its investigation protocol, given the need to use subpoenas to carry out the effort.

The board’s special committee overseeing the investigation–formed by Ana Matosantos, David Skeel and Arthur González–approved on Oct. 11 the initial plan developed by the firm. In consultation with the three board members, Kobre & Kim established the objectives of the investigation, as well as the areas to be examined and their priority level.

To date, the firm has examined documentation related to public debt issuances since 1990, the government’s certified fiscal plan and a government liquidity analysis conducted by accounting firm and board adviser Ernst & Young. Documents have also been requested of Puerto Rico’s Fiscal Agency and Financial Advisory Authority.

So far, the firm has held meetings with several people related to the board, including law firm Proskauer Rose, Ernst & Young, and ethics and risk adviser Andrea Bonime-Blanc. Likewise, it said it has met with lawyers from the official committees that represent retirees and unsecured creditors in the Puerto Rico bankruptcy cases under Title III of Promesa.

“As a result of these meetings, the Independent Investigator has already gathered substantial facts and evidence that are readily available and helpful in providing scope to the investigation and its timing,” Kobre & Kim’s report reads.

The firm said it does not expect to have a final report until the end of March, and warned it may be delayed due to the complications that could arise in the aftermath of Hurricane Maria. The special investigators assured they are accommodating witness’ requests such as extensions to document-delivery dates.

The report also indicates that priority in the investigation has focused on those aspects that affect electricity and water services and other critical infrastructure affected by the major hurricane.

During its 10th public meeting, scheduled for Tuesday, the fiscal board will discuss the debt’s investigation, according to the agenda published Monday.

Independent Investigator’s First Interim Report (Text)

Gov. Rosselló defends new Puerto Rico Central Recovery & Reconstruction Office

SAN JUAN – Although an executive order gives a new office broad powers over the management of funds that arrive for the recovery of Puerto Rico after Hurricane Maria, Gov. Ricardo Rosselló Nevares assured it won’t have absolute control over them.

“It’s a matter of planning. Imagine trying to manage separately all these resources that Puerto Rico may get. That will create an incredible planning problem,” he said Sunday morning during a press conference in La Fortaleza.

(Juan J. Rodríguez/CB)

For the governor, the decision to create the new Central Recovery & Reconstruction Office (CRRO) responds to “best practices” after natural disasters, which require having “a centralized place” for the management of financial resources, whether state, federal or private.

“This is not an office that is going to control all the funds. It’s like a hub, a single connector to facilitate the process with the many resources that come from the federal government,” Gov. Rosselló Nevares said. He insisted “it is a matter of logistics, design, execution and collaboration with all the stakeholders.”

However, Executive Order 2017-65 establishes that the CRRO “will receive and administer all funds and resources made available” for the recovery and reconstruction efforts in Puerto Rico, no matter where they come from. The office will determine priorities and implement guidelines for the use and disbursement of those “resources.”

La Fortaleza announced Saturday the establishment of the new office by executive order, as a division under the umbrella of the Public-Private Partnerships Authority (PPPA). The latter will be the exclusive beneficiary of federal funds made available to Puerto Rico. The CRRO, moreover, will develop and implement a “strategic plan” for reconstruction in the short, medium and long terms.

Gov. Rosselló Nevares said neither the federal government nor the commonwealth’s financial control board requested the creation of the new office. The government acted “proactively,” he said.

For his part, Christian Sobrino, the government’s representative to the board, said the creation of the CRRO was consulted “informally” with the federally established panel, but not the executive order itself.

Although he believes there shall be no problems with the board, it is still unclear who has the last word over the management and supervision of the federal funds that arrive after Hurricane Maria.

“The board has oversight over the budget process and the fiscal plan. There are elements of federal programs where the board does not formally enter. That is established by Promesa,” Sobrino replied.

As for who will run the office, Gov. Rosselló Nevares said that is still being determined, although for the time being, it will be under Omar Marrero, the PPPA’s director.

Regarding Senate President Thomas Rivera Schatz’ concerns on the constitutionality of the executive order and the powers it confers to the CRRO, the governor said its creation follows the steps taken by jurisdictions such as Louisiana, New York and New Jersey and what they did after hurricanes Katrina and Sandy. He also made reference to the federal funds for infrastructure investment that the commonwealth received in 2009 and for which the Infrastructure Financing Authority (Prifa).

“The ARRA [American Recovery and Reinvestment Act] funds process occurred during an administration in which he [Rivera Schatz] was president of the Senate. This is not very different from that,” the governor said. “This is not an entity that’s going to monopolize all the funds and decide what’s going to be done.”

Within its powers, the new office can finance and execute infrastructure projects, as well as identify and seek “innovative alternatives” for financing. Any plan it makes must consider all available resources, whether federal, state or private.

The order also provides that the office will collaborate with the state coordinating officer, a position held by Héctor Pesquera, as well as with the governor’s authorized representative (GAR), José Marrero, who directs the Office of Management & Budget.

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If any law or regulation requires intervention by the aforementioned, the office must include them in its processes.

When asked why the office was not established through the GAR, Gov. Rosselló Nevares explained that because that representative works mostly with the Federal Emergency Management Agency (FEMA), it was necessary to establish a parallel structure for the management of funds that may be received from other entities.

“Resources from two sides will be sent: from FEMA and resources that aren’t FEMA’s,” the governor said. “We need to have those two structures. The GAR remains [and] has its role. José Marrero is the GAR designated to carry out this. We also want to have the other reconstruction and revitalization structure.”

Puerto Rico’s fiscal board postpones furloughs following Hurricane María

SAN JUAN — Puerto Rico’s financial control board announced on Saturday it will no longer discuss the reduction of working hours for public employees, at least until next summer.

“In the aftermath of the catastrophic storm that has devastated Puerto Rico, the board is postponing any discussion of furloughs until next fiscal year and it is withdrawing its related lawsuit,” the board’s statement reads.

As first reported by Caribbean Business, the governing body created by the federal Promesa law announced on Aug. 4 its determination to implement a furlough program of two days a month to public employees, beginning on Sept. 1. Amid opposition from the commonwealth government, the board sued the Gov. Ricardo Rosselló in late August to enforce the measure, along with cuts to pensions, according to the island’s certified fiscal plan.

The decision to postpone the discussion on furloughs comes a day after the board held an executive meeting during which members discussed the next steps following the passage of Hurricane Maria in Puerto Rico, sources told Caribbean Business.

Fiscal board sues Puerto Rico government over furlough

The board, moreover, is requesting the federal government to transfer employees from different agencies to assist in recovery efforts in the coming months.

According to the statement, several members of the governing body were in Washington, D.C., this week, holding meetings with administration officials, as well as several members of Congress.

The board says it urged the federal government to “expedite responses to all requests for assistance from the government of Puerto Rico, increase financial assistance, lift the caps on individual programs of financial aid available to the island, and waive the local government cost-sharing requirements across available programs, including permanent recovery work.”

For its part, the chairman of the board, José Carrión, said that the recovery of the island after Hurricane Maria “is going to be long and hard, but Puerto Rico will come back better and stronger.”

Hurricane María swept Puerto Rico last Wednesday, leaving thousands without homes, causing severe damage to infrastructure and the collapse of energy and telecommunications systems. The government has reported 16 storm-related deaths to date.

Puerto Rico fiscal board ‘devastated’ by Hurricane María’s impact

Puerto Rico fiscal board picks public debt ‘investigator’

SAN JUAN – Attorney John Couriel, who ran for a Republican seat in the U.S. House of Representatives and now practices with the law firm Kobre & Kim, will lead the Puerto Rico fiscal control board’s efforts related to an investigation of the island’s debt.

Motions filed separately Tuesday evening by the board and a group of government creditors as part of the bankruptcy process under Title III of the Promesa law revealed the selection.

Although Kobre & Kim was hired Sept. 1, it is the first time the body established by the federal law has publicly mentioned the selection of the Miami-based firm.

Fiscal board seeks team to investigate Puerto Rico debt

On Wednesday morning, a statement was then issued saying the board’s special committee for the investigation of the debt retained the firm as the “independent team to carry out a review” of the island’s debt and “its connection to the current fiscal crisis.”

In another motion presented Tuesday, the board defends the experience and independence of the chosen firm, which will report exclusively to the board’s lawyers and its committee to probe the public debt. The special committee is composed of board members Ana Matosantos, Arthur González and David Skeel. Chairman José Carrión, who was originally appointed to the committee, withdrew from it, citing his relationship to Banco Popular.

The document adds that Couriel and Kobre & Kim attorneys have already held meetings with board members, attorneys and consultants and have an initial work plan to conduct the investigation. Likewise, they have reviewed fiscal plans, financial analyzes and debt issuance documents of the government and its instrumentalities, among others.

John Couriel (Screen Capture of

Couriel and Kobre & Kim’s hiring comes about as a group of creditors is requesting court authorization to conduct a probe into the causes of the island’s fiscal crisis, particularly debt issuances and the role played by Banco Popular, Banco Santander and the Government Development Bank (GDB).

On July 21, the official committee of unsecured government creditors asked the federal court to allow it to conduct an investigation into the public debt. Days later, on Aug. 2, the board announced its intention to initiate a similar inquiry and has since assured it is the entity with authority to conduct it.

Both sides are amid a dispute over an investigation process that is acceptable to all, as was requested by Magistrate Judge Judith Dein during a hearing at the end of August.

The board says its special committee is conducting the investigation “pursuant to the authority granted to the board by Congress and the president” under the Promesa law. The goal, it says, is to have a final report of the public debt’s investigation within the next six months.

The attorneys representing the creditor committee and the firm selected by the board to conduct the investigation will all bill the Puerto Rico government.

Kobre & Kim’s website says Couriel has extensive experience in financial cases and served as assistant U.S. attorney in the criminal division for the Southern District of Florida. He also practiced with Davis Polk & Wardwell, which currently represents a group of GDB creditors.

The financial terms of the contract between the board and the hired firm are not known. A request for further details from a board spokesperson had not been replied to as of this writing.

The board’s special committee, which had issued a request for proposals in August, says in its Wednesday release that it “considers this investigation an integral part of the Board’s mission to restore fiscal balance and economic opportunity and to promote Puerto Rico’s reentry to the capital markets.”

The investigation will include a review of the “fiscal crisis and its contributors, and an examination of Puerto Rico’s debt and its issuance, including disclosure and selling practices,” according to the board.

Judge Swain sets deadlines on Aurelius, Utier actions

SAN JUAN — Federal Judge Laura Taylor Swain will listen on Nov. 15 to arguments in connection to two separate lawsuits filed last month that challenge the constitutionality of the commonwealth’s financial control board, certified fiscal plans and approved budgets.

In an order issued Sept. 6, Swain explained that the U.S. attorney general has until Oct. 6 to notify the court whether the federal government will intervene in the action filed by Aurelius Capital Management, a hedge fund that holds more than $470 million in general obligation bonds, among other commonwealth debt. The creditor group questions the validity under the U.S. Constitution of the board members’ appointments.

As it involves a constitutional challenge to a law approved by Congress, the federal government can elect whether it will defend the validity of the legislation. If it decides to do so as part of Aurelius’s action, the federal government has until Nov. 5 to file its brief.

Puerto Rico hit with 2 lawsuits challenging board’s power 

The government, the fiscal board and other parties that wish to oppose Aurelius’s action must file by Oct. 3. The court will hear arguments on the Aurelius case at the omnibus hearing scheduled for Nov. 15.

A similar action was filed by the Irrigation & Electrical Workers Union (Utier by its Spanish acronym), which represents 3,600 employees of the Puerto Rico Electric Power Authority (Prepa). Utier also seeks to protect its collective bargaining agreement and have the utility be declared “a protected essential public service.”

Utier spokesman Ángel Figueroa announces two lawsuits it filed in federal court. (Agustín Criollo / CB)

Regarding Utier’s action, the U.S. attorney general has until Oct. 16 to notify the court its intent to intervene. If it decides to do so, it has until Nov. 10 to file its brief. The deadline to answer or otherwise respond to the complaint is Oct. 3.

If a motion to dismiss is filed, Utier’s opposition brief must be filed by Oct. 17, while reply briefs are due by Oct. 31.

Puerto Rico gov adamant: We’re not going to implement furlough program

SAN JUAN – If the federal court determines that the Government of Puerto Rico must cut two public employee workdays a month, as requested by the fiscal control board in a legal filing, Gov. Ricardo Rosselló would disregard said order.

The governor insisted Wednesday that such a measure “is not necessary” because of the impact it would have on the economy and the 127,296 public employees it could apply to in the executive branch, except for members of the police force.

Fiscal board sues Puerto Rico government over furlough

“I’m not going to work on more hypotheses. We are a jurisdiction of law and order. The government’s position has been the same since day one: We do not favor, we do not support, we are not going to implement the reduction of working hours because it is not a necessary measure right now for Puerto Rico and because it has a non-transformative impact,” the governor said when asked if he would abide by a court decision along those lines.

The fiscal control board filed a lawsuit Aug. 28 before federal Judge Laura Taylor Swain, who is in charge of the renegotiation of Puerto Rico’s debt under Title III of Promesa, for the furlough program and a 10% cut to public pensions to be declared “mandatory” parts of the fiscal plan, not recommendations as the government claims. The intention is for the furlough to come into effect starting Sept. 1

The federal court has yet to comment on the matter.

Puerto Rico governor confident he will prevail against fiscal board over furlough

Although on Monday he was confident of prevailing against the board in the legal dispute, the governor said Wednesday that the government has not responded to the legal action. “It is an issue the lawyers are working on at this time,” he assured.

Although at loggerheads with the board on this issue, Rosselló was emphatic that “our administration does not have a fight” with the entity created by the Promesa federal law.

In fact, members of the oversight board and government officials are currently in New York “working on a mediation process” with creditors, the governor said during a press conference in Dorado, where he announced the expansion of Boston Scientific and the inauguration of a health research Center of Innovation.

Rosselló also assured that government’s attorneys are evaluating the recommendation made by the fiscal control board on the need to provide independence to the boards of government entities and public corporations, given that Act 3 of 2017 allows the governor to remove any of its members.

“As with all recommendations, we will evaluate it. The law provides that we have a 90-day period to do so. We would like to do it before that,” the governor said. “We welcome all the board’s recommendations with pleasure.”

Non-teaching employee union joins protest against Puerto Rico board

SAN JUAN – The president of the Non-teaching Exempt Employees Association (Heend by its Spanish acronym), José J. Torres Nazario, announced that the union will join others to participate in a demonstration against the fiscal control board Wednesday, Aug. 30 .

The union leader urged citizens, especially working-class families and the university community, to join the demonstration at 12 p.m. in front of the fiscal board’s headquarters in Hato Rey’s World Plaza building.

“This is a critical moment. The board has been obsessed with taking from us two workdays and [lowering our] salary, by eliminating the Christmas bonus and, not content with monumental cuts to the budget, now they demand to suck more blood than they already have from the university,” Torres Rosario declared, adding that citizens should be present to show their indignation against the board in a common front.

“We must let them know that it is enough abuse, that the people have already been trampled on enough and we won’t tolerate a single wound more. Nobody believes the board that its intention is to help this country. Its intention is only to protect the payment to bondholders to pay them a debt for which nobody is certain of its legality,” the Heend president stressed.

Torres Rosario affirmed that “the board already went to court to prove that it will not desist from [ordering] the furlough, and we workers must show them we will not take even one step back. We will not carry the entire load of this debt that we didn’t decide and that we don’t even know if it is real.”

The spokesperson of the Puerto Rico Union Movement, Luis Pedraza Leduc, recently said the demonstration will be a “national mobilization” similar to the National Strike on May 1. A speaking stage on the intersection of Roosevelt and Muñoz Rivera avenues in San Juan will be where the demonstrators will gather.

“This mobilization will have the effect of a national strike, from the perspective that workers will be mobilizing to this activity and there won’t be work,” Pedraza Leduc said.

As with the May Day demonstration, the logistics for each sector will be coordinated separately, but the peak of the event is expected to be at noon.


Puerto Ricans protest on May Day as debt deadline nears

Far from aligning themselves with Gov. Ricardo Rosselló’s refusal to implement the furlough program announced by the fiscal board, Predaza Leduc said the differences between the administration and the board are merely “cosmetic.”

“This supposed difference between the government of Ricardo Rosselló and the fiscal control board…only distinguishes itself by how it tightens [the noose] on workers’ necks,” Pedraza Leduc said.

Among the measures denounced by the union leader are labor reform, the government as a single employer law and Acts 3 and 26, which reduce worker benefits and affect collective bargaining agreements.

Regarding the public debt’s audit, Pedraza Leduc was emphatic that he does not believe the government or the fiscal board should be in charge of the investigation.

Who would a Puerto Rico government furlough affect?

“We disagree that the board itself may be assessing the situation. An investigation into the debt and the participation of banks and bondholders has been requested at the court level. Banks are opposed. Obviously they are preventing information from being obtained. However, this is not the audit we endorse. We endorse a much broader, citizen process, with more sectors involved that guarantee access to information and have credibility,” the union leader said.

Among the groups that make up Movimiento Sindical are the Puerto Rico Federation of Workers, Puerto Rican Workers’ Central, the Coordinadora Sindical, the Broad Front in Defense of Public Schools, the General Union of Workers, and the Puerto Rican Workers Union.

Puerto Rico fiscal board chairman: ‘We aren’t acting crazy’

SAN JUAN – The chairman of the Financial Oversight & Management Board for Puerto Rico, José Carrión, played down on Friday legal challenges questioning the seven-member panel’s constitutionality. He also denied allegations that the board is violating the federal Promesa law in its managing of the island’s fiscal crisis.

Some of the island’s creditors and a union have filed lawsuits, challenging the selection process of the board. They argue the appointment violated the Appointments Clause under the U.S. Constitution because none of the seven members were confirmed by the Senate.

Fiscal board Chairman José Carrión (Juan J. Rodríguez/CB)

“I am not a lawyer, but I know there is difference between a traditional challenge to the Appointments Clause and a challenge to the Appointments Clause based on the territorial situation of Puerto Rico. But I don’t know if that will be the basis for the [board’s] defense. It will be an interesting case and, unfortunately, it will cost the people of Puerto Rico,” Carrión said.

The fiscal board’s chairman delivered a speech during an Associated General Contractors event held in Río Grande.

Public employees union sues Puerto Rico fiscal board, FAFAA and Treasury

The Irrigation & Electrical Workers Union (Utier by its Spanish acronym), which comprises about 3,600 employees of the Puerto Rico Electric Power Authority (Prepa), sued the utility, the commonwealth government and the fiscal board on Aug. 7, challenging the constitutionality of the members’ selection process and their determinations, certified fiscal plans and budgets, as well as local legislation, among other matters.

Aurelius Capital, a hedge fund that owns more than $470 million in general obligation bonds, also filed a similar action, alleging the fiscal board’s members were unconstitutionally appointed for not being confirmed by the upper chamber, in violation of the Appointments Clause and the separation of powers.

Resident commissioner doesn’t believe atmosphere in DC conducive for amending Promesa

Carrión, moreover, dismissed claims the fiscal board has violated Promesa in the way it has managed the commonwealth’s fiscal crisis. Some creditors say the board has not respected payment priorities, has approved “faulty” fiscal plans and is acting beyond its purview.

“We are following Promesa according to our own interpretation and the interpretation of our attorneys, whom we consult before making any decisions. We are not acting crazy but doing what we have to do under the parameters as we understand it, provided to us by our lawyers,” the board chairman stressed.

Puerto Rico hit with 2 lawsuits challenging board’s power 

Meanwhile, Carrión recalled that, last month, the board unveiled a series of proposals or “topics to talk about,” including 18 suggestions for amendments to federal laws that could help Puerto Rico’s economy, such as seeking the island’s exclusion from federal air cabotage laws.

“Next week, we plan to shape them, advance the topics of economic development,” he said, in reference to lobbying efforts in Congress to achieve the changes. “We want to help the island,” Carrión added.

When asked about President Donald Trump’s interest in avoiding the use of political capital on issues related to Promesa and the commonwealth’s fiscal crisis, as sources have told Caribbean Business, Carrión said he didn’t know anything about it, adding that “I’m [rooting] for us.”

Sept. 1 will be normal workday for Puerto Rico public workers, gov says

SAN JUAN – Puerto Rico Gov. Ricardo Rosselló assured Thursday that Sept. 1 will be a normal workday, even though it is the day the government is required by the fiscal control board to implement a public worker furlough, which the panel approved during its ninth public meeting.

The governor insisted that his administration has already determined it will not cut the two days a month, but is still trying to prove to the board it will achieve the government savings established in the certified fiscal plan.

“The alternatives…we have already presented countless initiatives. Right? I don’t call them alternatives because, again, that would imply we must achieve a liquidity goal that had already been achieved. But we are certainly in disposition,” said the governor, whom in the past said his administration was considering “alternatives” to the furlough program, and now calls them “initiatives.”

Who would a Puerto Rico government furlough affect?

“Our team has been in continuous communication with the executive director of the fiscal oversight board [Natalie Jaresko], with the members of the advisory teams. We are still looking for initiatives to comply with the fiscal plan,” the governor added when asked by Caribbean Business.

Rosselló once again called for “dialogue” with the fiscal board to avoid implementing the cut, although in the past he said he would stand firm regardless of the “final consequences” to stop such a measure.

He had even stated that his government would defend itself in court if the members of the board take the case to a court.

Public employees union sues Puerto Rico fiscal board, FAFAA and Treasury

With only a week until the end of the month, thousands of public employees continue to anticipate what could happen with their workdays, as there is little information about the possibility of the board retracting its order.

While the board insists that the furlough program is part of the certified fiscal plan, the government maintains it is only a “recommendation” it will not carry out, but will inform the U.S. Government about its reasoning, pursuant to section 205 of the Promesa law.

Gov’t files bill for Puerto Rico co-ops to comply with fiscal plan

SAN JUAN – The Secretary of Public Affairs and Public Policy, Ramón Rosario, announced Thursday that the Puerto Rico government has presented a bill that the fiscal control board required for the Puerto Rico Cooperatives Supervision & Insurance Corp. (Cossec by its Spanish acronym) to comply with its fiscal plan, which was certified Aug. 4.

The measure, which does not yet appear in the legislative procedures system, which has all the presented bills, provides for putting in force Cossec’s fiscal plan, called Coop-Self, which suggests a $533 million injection into the cooperatives system. This would help to address possible losses resulting from the restructuring of Puerto Rico’s debt through Title III of the federal Promesa law.

The amount would come from $383 million in capital and $155 million would come from the sale of certain loan portfolios, according to the fiscal plan.

Puerto Rico’s fiscal board approves plan for Cossec, lifeline for credit unions

The bill also creates the Special Committee for the Implementation of the Fiscal Plan, which will be composed of the executive director of the Fiscal Agency and Financial Advisory Authority (FAFAA), and the Cooperative Development and Financial Institutions’ commissioners.

Although it was previously announced that the committee would replace Cossec’s board, Thursday’s press release indicated that the panel will not be eliminated. On the contrary, the committee would be created to implement the programs and reforms required by the fiscal board while maintaining the co-op supervisory board.

“With this measure, we enable the implementation of Cossec’s Fiscal Plan, ensuring that the savings and loan cooperatives that contribute so much to the economy of Puerto Rico can continue to provide excellent service” to its members, Rosario says in the written statement.

The measure also seeks to “modernize governance” at Cossec, which regulates and insures deposits in the island’s 116 cooperatives, which have more than one million clients and $7.9 billion in assets, the secretary said.

Among the changes, the fiscal board requested that the bill contain a modernization of the laws governing cooperatives to enable them to sell assets to other entities, if Cossec determines liquidation is necessary, and the issuance of preferred shares.

Another of the amendments requested by the fiscal board is geared toward ensuring that credit unions are supervised by an entity with expertise in this area, such as the National Credit Union Administration (NCUA), and that Cossec seek external assistance, including from federal agencies and advisors, to improve the entity’s practices and address the challenges related to the island’s fiscal crisis.

The cooperatives have invested some $965 million in Puerto Rico bonds, or 65 percent of their total investments totaling $1.5 billion. Most correspond to Government Development Bank (GDB) notes, which are worth 84 percent less than their original, or par, value.