Puerto Rico’s new fiscal control board, responsible for overseeing the island’s debt repayment, is entrenched in the banking industry and “will fight for the creditors, not the people,” according to a study released Thursday.
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Three of the seven members appointed to the board on Wednesday are central members of the Puerto Rican banking elite and the other four are good news for creditors, revealed a chart by watchdog group Little Sis, which connected the board members to the institutions behind them.
“They aren’t people who were selected for how much they care about common Puerto Ricans,” said Little Sis research analyst Aaron Cantu, who prepared the chart, to teleSUR. “They were selected because they had the interest of creditors in mind, and they will fight for creditors, not for people.”
The report cites a study by investment firm Height Securities that finds the board "a net positive for creditors" at the expense of public spending.
Two of the board members, Carlos Garcia and Jose Ramon Gonzalez, headed Santander Securities, a financial advisor that was fined last year for selling risky Puerto Rican bonds. Both also served as president of the Government Development Bank, which issues Puerto Rico’s debt.
A third, Jose Carrion III, is an even bigger name in Puerto Rico’s “interconnected” and “insular” banking circle and hails from a banking dynasty that had “invested interest in Puerto Rico’s debt and invested interest in Puerto Rico’s financial precarity,” said Cantu. His sister was paid at least US$1 million to advise Och-Ziff Capital Management, one of the world’s biggest vulture funds, which heavily lobbied her husband, U.S. Resident Commissioner from Puerto Rico Pedro Pierluisi, for preferential protections.
Half of the remaining members are tied to the U.S.’s leading neocon think tanks, the American Enterprise Institute and the Cato Institute, and the others were considered by the Height Securities study to be "good as anyone in the creditor community could have expected."
Thus, even before the board — already under heavy criticism for serving as a neocolonial arm of the U.S. — begins rolling out any of the components of the controversial PROMESA bill, Cantu found that it “very transparently works in the interest of banks and works in the interest of hedge funds that won’t work in the interest of people.”
According to the terms of the bill, the board will have the power to restructure the island's debt, as well as to impose sweeping austerity measures on the cash-strapped island.
Critics say the board will slash the minimum wage to US$4.25 per hour for minors, implement mass layoffs, and cut basic services with no protections for pensions and worker rights.