The Trump administration on Tuesday fired five of the seven members of the Financial Oversight and Management Board for Puerto Rico, citing inefficient and ineffective leadership.
The five Democrats on the board were notified of their dismissal via email on Friday, Breitbart first reported on Tuesday. The board later confirmed the members were fired, leaving only the board’s two Republican members, Andrew G. Biggs and John E. Nixon, remaining.
Emails reviewed by Bloomberg cited the board’s salaries and decisions made by the group to prolong the U.S. territory’s bankruptcy proceedings as reasons for the terminations.
The Financial Oversight and Management Board was created in 2016 under the Puerto Rico Oversight, Management, and Economic Stability Act, a federal law passed to address the island’s mounting debt crisis. The board was granted sweeping powers to bypass local elected officials in restructuring more than $70 billion in debt.
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Gretchen Sierra-Zorita, the former White House director of Puerto Rico and the territories under President Joe Biden, told NOTUS on Tuesday that she learned of the firings from the press, and initially didn’t believe it.
“To my knowledge, and I would think to anybody’s knowledge, not a single member of the board has done something untoward that was out of their scope of responsibility,” Sierra-Zorita told NOTUS. “To fire anybody from the board, there must be a cause, according to the PROMESA law. So technically, this is not in compliance with the law.”
“I think what is happening right now is whoever has an interest in the composition of the board is lobbying heavily to appoint individuals,” she continued.
The White House did not respond to NOTUS’ request for comment, nor has it released an official statement, but told The Associated Press that the board “has been run inefficiently and ineffectively by its governing members for far too long and it’s time to restore common sense leadership.”
Laura Loomer, who has been unofficially consulting with the president, posted over the weekend that Puerto Rico’s oversight board was “a colossal failure all around.”
“The failure of lawyers and consultants to resolve the bankruptcy of Puerto Rico has left the people of Puerto Rico without power, or a path forward,” she wrote Saturday on X. “Every single one of these lawyers and consultants need to be fired, and a new Board needs to be installed to clean up this mess. …This is absurd. It’s basically USAID 2.0.”
In her post, Loomer called out board staffer David Brownstein, a veteran Citi employee hired as a restructuring adviser to work on the adjustment phases of the island’s electrical grid, for opening up a boutique law firm that has been granted a contract to work on Puerto Rico’s bankruptcy case.
“David Brownstein is paid EVERY DAY what the average Puerto Rican makes in a full year....paid for by the people of Puerto Rico — the very people he is supposed to be helping!” Loomer said in the post.
In a release on Tuesday, New York Rep. Nydia Velázquez said “this sudden purge by Donald Trump is not about justice or reform.”
“It simply creates an opening to stack the Board with even more extreme, pro-bondholder appointees who will continue to put the needs of hedge funds over the Puerto Rican people,” she wrote Tuesday.
The board has been litigating a case over $8.5 million in legacy bond debt, which has been a major point of contention for the panel. Those aligned with the bondholders are likely the ones who influenced the administration to fire the board’s Democratic members, Sierra-Zorita said, leaving fired members with little hope for recourse.
“Why would they litigate when they’re already kind of litigating by proxy in court,” Sierra-Zorita told NOTUS. “I don’t know if they can litigate.”
In a post on X, New York Rep. Ritchie Torres, who previously introduced legislation in an attempt to disband the board, said Trump’s firing all Democratic members of the board is a sign that he “will likely replace them with partisan loyalists: political hacks willing to sell out Puerto Rico to predatory bondholders.”
“If those bondholders secure their sweetheart deal, Puerto Rico will be locked into paying the highest electricity rates in the country (second only to Hawaii) while relying on a failing electric grid,” Torres continued. “Paying the highest electricity rates for the worst electric grid [is] not ‘efficiency.’ It’s exploitation.”
Puerto Rico’s electric grid remains in a fragile state nearly a decade after the devastation caused by Hurricane Maria. The grid’s privatization and drawn-out restructuring negotiations overseen by the board have failed to deliver reliable service, resulting in outrage across the territory. Residents on the island are left with a higher average electricity price than all but three U.S. states for the worst-performing service.
Under the PROMESA law, the president is allowed to appoint one member of the board himself before choosing all subsequent board members from a list of appointees written by both the Senate and House majority and minority leaders.
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