Reflections on Two Years of P.R.O.M.E.S.A.

Abstract

This Essay draws both on my scholarly and on my personal experience as a member of Puerto Rico’s oversight board to assess the first two years of the Board’s existence. I begin in a scholarly mode, by exploring the question of where P.R.O.M.E.S.A., the legislation that created the Board, came from. P.R.O.M.E.S.A.’s core provisions are, I will argue, the product of two historical patterns that have emerged in responses to the financial distress of public entities in the United States. The first dates back to the 1970s crisis in New York City, while the second is much more recent. If P.R.O.M.E.S.A. had been enacted prior to either of these developments, its provisions would have looked very different.

After exploring P.R.O.M.E.S.A.’s origins, I venture a more personal account of the decisions the oversight board has made during our first two years of existence. Our first year of activity came before Hurricanes Irma and María, and the second in the hurricanes’ awful aftermath. Like the recovery generally, we still are far from having completed the task we were given. I conclude by addressing the criticisms we have faced—some from the left and others from the right—and by offering my own view on how the success or failure of the Board should be assessed.

Keywords: Puerto Rico Oversight, Management, and Economic Stability Act, PROMESA, oversight boards, history of responses to financial distress of US public entities, reorganization, Chapter 9 of Bankruptcy Reform Act, fiscal plans, restructuring, Title III, Hurricane Maria, PREPA, Governor Ricardo Rossello

JEL Classification: H72, H75, H83, K3