September 1, 2016

September 1, 2016 | Commentary on Economy

Puerto Rico Oversight Board Members Specialize in Finance, Not Economic Reform

President Barack Obama has appointed the seven members of the congressionally mandated oversight board for Puerto Rico. The board will have authority over the U.S. territory’s finances as Puerto Rico goes through a new bankruptcy proceeding created by the Puerto Rico Oversight, Management, and Economic Stability Act, which the president signed this summer.

The members’ backgrounds reflect an emphasis on financial expertise rather than economic reform. The focus comports with the law’s emphasis on helping Puerto Rico default on its excessive debts in a structured manner rather than on helping the territory’s underperforming economy. As Puerto Rican economist Antonio Fernos Sagebien said Wednesday, the law “as it is, cannot be considered a real tool for economic development.”

Republicans in Congress chose four of the board’s members:

  • Andrew Biggs, a resident scholar at the American Enterprise Institute with expertise in pensions and entitlements.
  • Jose Carrion III, an insurance executive in San Juan.
  • Carlos Garcia, a past president of Puerto Rico’s Government Development Bank.
  • David Skeel, a bankruptcy law professor (who has written about the debt crisis in The Wall Street Journal).

President Obama and congressional Democrats chose three members:

  • Arthur Gonzalez, a retired judge, and former chief judge of the U.S. Bankruptcy Court for the Southern District of New York, who presided over major corporate bankruptcies.
  • Ana Matosantos, a former director of the California Department of Finance.
  • José Ramón González, another previous president of Puerto Rico’s Government Development Bank.

Most of the board’s members have moved back and forth between the private and public sectors, working in financial institutions on both sides. The exceptions are the two scholars: Mr. Biggs, who holds a doctorate from the London School of Economics; and Mr. Skeel, who became a law professor a few years after earning his degree.

Mr. Skeel may be the most scrutinized member of the board. In 2014, he wrote approvingly of extending not only to Puerto Rico but also to the states. Investors in Illinois debt are likely to be curious whether Mr. Skeel’s views reflect those of congressional leaders as well.

Republicans apparently did a better job than Democrats at keeping their selection process quiet: As of Wednesday morning, a lawyer’s blog devoted to profiling potential board members had written about all three Democratic appointments but covered none of the Republicans’.

About the Author

Salim Furth, Ph.D. Research Fellow, Macroeconomics
Center for Data Analysis

Related Issues: Economy

First appeared in The Wall Street Journal Think Tank Blog.