Puerto Rico Bailout Bill Allows “Gifts, Bequests, or Devises of Services or Property” to Control Board Members
As reported by Bloomberg yesterday, the PROMESA bailout bill for Puerto Rico includes a provision that would allow members of the control board to “accept, use, and dispose of gifts, bequests, or devises of services or property, both real and personal” for the purpose of “aiding or facilitating” the board’s work.
If that wasn’t bad enough, the House Natural Resources Committee claimed that such language is “fairly commonplace in ensuring statutory objectives are met in circumstances where non-federal sources of funding will be necessary.” Accordingly, the rationalization for the provision in this case is that the board will be able to “fulfill its purpose” in the event that Puerto Rico’s government can’t (or rather chooses not to) provide “sufficient funding” for it.
Will the Puerto Rican government actually fund the control board knowing its existence is widely opposed by the Puerto Rican people? And, of course, there’s the little matter of Puerto Rico allegedly being “out of money,” as their governor has so stridently claimed for months. According to the CBO, the board will cost $370 million over its lifetime. So it appears that these gifts will come in handy.
So who will be in the giving spirit?
The provision is crafted in such a way that any stakeholder looking to buy influence on the board will be able to do so. Perhaps labor unions (SEIU, in particular), which already have generously given their time and resources to help Puerto Rico’s government produce a report claiming that billions of dollars of its debt is invalid, will take center stage in the gift-giving war, hoping to ensure that the Commonwealth’s underfunded public pension system is provided preference over bondholders. Or what about certain hedge funds looking to convince the board that their claims should be prioritized over the claims of other bondholders, including those afforded first priority in Puerto Rico’s Constitution?
Indeed, rather than actually weighing Puerto Rico’s competing claims, and clarifying where they stand in the context of Puerto Rico’s Constitution, some in Congress have decided to invite a contest between who can out-bribe the others. When people say that Washington is broken, revelations like this help explain why.