Fiscal board tilts conservative with appointment of new member
By The Star Staff
The appointment of Justin Peterson, managing partner of the Washington, D.C. lobbying firm DCI Group, to the Financial Oversight and Management Board for Puerto Rico appears likely to bring about a conservative majority at the federally appointed panel in which none of the board members reside in Puerto Rico.
DCI Group represented Puerto Rico’s general obligation bondholders in their fight to stop the approval by Congress of the federal Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), which created a financial control board to oversee Puerto Rico’s finances and represent it in the bankruptcy process.
“I hope he [Peterson] can differentiate between his role as debt collector and his role in rebuilding the island,” Puerto Rico Senate Majority Leader Carmelo Ríos said. “Puerto Rico does not need another debt collecting agency.”
Ríos said PROMESA was created to help Puerto Rico rebuild its economy and not to please bondholders. He warned that Peterson will not have allies in the commonwealth government if he attempts to cut public pensions and force the people to make more sacrifices.
Yesterday, President Trump nominated Peterson as a member of the oversight board, two days after the resignation of board chairman José Carrión, a Republican. The appointment means the board will have three Republicans and two Democrats.
Neither Peterson nor any of the current oversight board members lives in Puerto Rico.
Kenneth Rivera, a former president of the Puerto Rico Chamber of Commerce, said the fact that Peterson does not live in Puerto Rico and is unfamiliar with its social problems is a drawback.
“The fact that Peterson is familiar with Puerto Rico’s debt crisis has its merits because he is not here to learn the ropes, but I would rather have someone who lives in Puerto Rico on the board,” Rivera said. “He does not have a relative who goes to public school or who has a government pension like someone who lives here [would likely have].”
Cate Long, who runs a research service for Puerto Rico’s bondholders, hailed the appointment via Twitter. Long has been a critic of the oversight board for allegedly disregarding the creditors’ protections contained in PROMESA, a charge the board has denied.
“I don’t know him but know his firm was deeply involved in the fight over the development of PROMESA,” Long tweeted. “I think he will be a good foil to those on the OBoard who think there are no creditor protections incorporated into the statute.”
John Mudd, a bankruptcy lawyer, said he hopes Peterson’s arrival will help hasten Puerto Rico’s exit from bankruptcy as the costs in lawyers and fees had surpassed $735 million as of July.