White House sets up Puerto Rico oversight

President Obama has named the seven officials that will run an outside control board to help repair Puerto Rico’s troubled finances.

The White House announced the appointees Wednesday, saying the group has “a broad range of skills and expertise need to tackle Puerto Rico’s complex challenges.”

{mosads}The announcement of the board sets in motion what could be a years-long process to right the troubled finances on the island. Years of economic decline have left Puerto Rico without enough revenue to pay off all its debt, forcing Congress to act earlier this summer.

The officials named are: Andrew Biggs, a resident scholar at the American Enterprise Institute; Jose Carrion III, head of the insurance brokerage HUB International CLC; Carlos Garcia, the former head of Puerto Rico’s Government Development Bank; Arthur Gonzalez, a senior fellow at the New York University School of Law; Jose Gonzalez, head of the Federal Home Loan Bank of New York; Ana Matosantos, a consultant who once headed California’s Department of Finance; and David Skeel Jr., a professor of corporate law at the University of Pennsylvania Law School.

Under a law passed in June, Congress authorized the creation of the oversight board, which will oversee the territory’s efforts to get back on a sustainable financial path. The panel has the power to effectively veto fiscal plans put forward by island officials. The law also grants Puerto Rico the ability to declare bankruptcy on its debt if necessary, among other changes.

In a statement, Treasury Secretary Jack Lew called on the island to submit a fiscal plan to the newly created board as quickly as possible.

“I encourage the Board to begin its work helping the people of Puerto Rico right away,” he said.

The White House said Wednesday that the officials were thoroughly vetted to ensure they had no financial conflicts of interest on the island. Congress was inundated by outside pressure from various investors in Puerto Rican debt when it was considering legislation, as various interested parties jockeyed for the best arrangement for their investments.

The White House also noted that a majority of the board’s members are Puerto Rican. A lingering concern among Democrats wary of the board was that it would effectively enable outside officials to set policy for the 3.5 million Puerto Ricans living on the island.

But how the board is set up, it is likely the control board will have a slight conservative perspective.

Under the law, the president populates the board by selecting candidates from a list built by congressional lawmakers. Speaker Paul Ryan (R-Wis.) and Majority Leader Mitch McConnell (R-Ky.) each were responsible for two slots, while House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Leader Harry Reid (D-Nev.) each got one. The law requires the president to fill the final slot with his own selection. None of the appointees are subject to Senate confirmation.

“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,” said Ryan in a statement.

Once established, the board has the power to certify fiscal plans and budgets put forward by the island’s elected officials, as well as prioritize certain infrastructure projects. If the island is able to balance its budget four years running and regain access to financial markets for its debt, the board will be dissolved.