As most of you know, I participated yesterday in a panel discussion on PROMESA in Washington, hosted by the National Taxpayers Union, along with House Natural Resources Committee Senior Policy Advisor Bill Cooper, Mercatus Center’s J.W. Verret, NTU President Pete Sepp, American Action Forum’s Gordon Gray, and Mayer Brown’s Warren Payne.
Discussion was lively and wide-ranging. I gave an overview of the various legal cases that are pending on the island, similar to those that I have done here and on my MUDDLAW blog, noting the recent ruling by Judge Besosa that the PROMESA legal stay did not apply to the Lex Claims litigation. Warren Payne talked at length about the government’s tax reform proposal, highlighting the need to easily repatriate profits from Puerto Rico to incentivize investment on the island. Professor Verret discussed potential reform options including Jones Act and federal minimum wage exemptions.
The most interesting tidbits of the day may have been comments made by Bill Cooper, who noted in his opening remarks that PROMESA was drafted with the two goals of restoring fiscal responsibility on the island and allowing Puerto Rico to regain access to the markets. In his words, the debt restructuring provisions of the bill received “undo focus” because PROMESA is “not a debt restructuring bill.”
This strikes me as noteworthy for a couple of reasons. Firstly, because, as Cooper alluded to, the bill has been discussed almost exclusively as a debt restructuring vehicle by nearly every party involved in this process over the last year. Secondly, because it suggests to me that the drafters did not envision the board being overly involved in any potential restructuring process.
Rather, it seems to indicate that the board’s main goal and focus will be to force the Commonwealth to adopt a fiscal plan that, in the board’s view, restores fiscal responsibility and facilitates access to the markets. This makes the next batch of numbers released by the Commonwealth all the more important since, as long as they comport with those two goals, it doesn’t seem that Cooper envisions the board subjecting too many parties to an all-out bankruptcy. Any debt restructuring that does come with the plan will presumably be of lesser concern to the board so long as it complies with the rules set forth in PROMESA, which stipulates that the bankruptcy proceedings must comply with the relative priorities established in Puerto Rican law. That would put much of the onus for deciding who and what gets restructured on our own government.
Cooper also responded to a reporter’s question the rampant rumors that he is being considered for the board’s executive director seat (something that makes his comments all the more interesting) by saying that, while he has seen his name thrown around by some observers, any such speculation is premature given that the board has not yet elected its chairperson. That election is the first item on the agenda of the board’s first meeting in New York this Friday, and the first item on a long to-do list for the board over the next several months to come.