Trump dismisses majority of Puerto Rico’s fiscal board
The Financial Oversight and Management Board for Puerto Rico confirmed Tuesday that the White House had notified it that President Donald Trump dismissed five of its seven members, a sweeping move that could reshape the powerful body steering the island’s finances.
“The Oversight Board has been informed by the White House that President Donald Trump terminated the following five board members from their position on the Oversight Board: Arthur J. González, Cameron McKenzie, Betty A. Rosa, Juan A. Sabater and Luis A. Ubiñas,” the board said in a statement. “The Oversight Board will continue to work to fulfill the mandate of [the Puerto Rico Oversight, Management and Economic Stability Act (Promesa)], and in the interest of the people of Puerto Rico.”
Telemundo obtained one of the termination emails sent to the ousted members. In the message, Trent Morse, the deputy director of presidential personnel, wrote: “On behalf of President Donald J. Trump, I am writing to inform you that your position as a Member of the Financial Oversight and Management Board for Puerto Rico is terminated effective immediately. Thank you for your service.” The email was sent the afternoon of Aug. 1.
The dismissals were first reported by Breitbart News and Bloomberg said it had reviewed emails notifying the members of their removal. The five dismissed members are Democrats; the two who remain — Andrew G. Biggs and John E. Nixon — are Republicans and Trump appointees. McKenzie, the most recent appointee, was named in September last year.
In a statement, Puerto Rico Gov. Jenniffer González said, “Today, President Donald Trump exercised his authority under the PROMESA law to change the composition of the members of the Financial Oversight and Management Board for Puerto Rico.”
She noted that during her term in Congress as resident commissioner, she worked with several members of the board, and would now work with whoever makes up the new composition once Trump announces it.
“My administration has maintained direct communication with the Board and its staff since day one,” González added. “This work will continue with the new members to put an end to the presence of the Board in Puerto Rico.”
A potential legal battle
The board, known as FOMB, was created by Congress in 2016 under Promesa after the island said it could not pay its debts. The law says the president may remove members only “for cause,” a standard generally interpreted to require misconduct, neglect of duty or incapacity. That restriction could invite legal challenges if critics argue the dismissals were political or lacked justification.
A recent case offers a precedent. In May, Judge Reggie B. Walton of Federal District Court in Washington blocked Trump’s removal of two Democratic members of the Privacy and Civil Liberties Oversight Board, saying that allowing at-will dismissals would make the body “beholden to the very authority it is supposed to oversee.” Promesa’s explicit for-cause language could make any challenge to these dismissals even stronger.
The White House defended the move: “The Financial Oversight and Management Board of Puerto Rico has been run inefficiently and ineffectively by its governing members for far too long, and it’s time to restore common sense leadership,” an official told Breitbart; the Associated Press reported receiving the same statement.
The official also accused the board of operating “ineffectively and in secret” and of “shelling out huge sums to law, consulting and lobbying firms.”
CBS News reporter Jenniffer Jacobs wrote on X that, according to the official, the board was designed to restore fiscal responsibility and public trust, but the Puerto Rican government “has continued practices of corruption and fraud in awarding public contracts.”
Debt fights, political reaction
Compensation has been a flash point. A 2017 analysis by The Daily Caller put the board’s annual salary budget at $3 million for 14 employees, an average of $214,000. Robert F. Mujica Jr., the executive director and a former New York State budget director, earns $625,000 a year, according to Jacobin.
The dismissals come as the board seeks to cut the Puerto Rico Electric Power Authority’s (PREPA) obligations to $2.6 billion from roughly $10 billion; some bondholders insist the utility can pay more. The AP reported that the White House accuses the board of preferring to “extend the bankruptcy.” In February, Mujica told the AP that paying the $8.5 billion demanded by bondholders was “impossible,” unveiling a fiscal plan that avoided further rate increases in the island, which is already burdened by high power costs and chronic outages.
Supporters say the board’s restructurings have reduced Puerto Rico’s debt burden and will save taxpayers $55 billion over 40 years. Critics counter that the unelected board has imposed austerity while spending heavily on consultants.
The New Yorker reported that, in 2017, the board was paying more than $1 million a month to McKinsey for “strategic consulting,” with additional millions to other firms. Separately, the Centro de Periodismo Investigativo reported McKinsey has charged the board a flat fee around $2 million per month and had collected about $50 million from late 2016 to late 2018.
Rep. Nydia M. Velázquez, Democrat of New York, said the purge “is not about justice or reform,” but “creates an opening to stack the Board with even more extreme, pro-bondholder appointees.” If creditor lobbyists are installed, she warned, Puerto Ricans could face “higher energy bills for decades and deeper service cuts.”
Rep. Jared Huffman of California, the ranking Democrat on the House Natural Resources Committee, called the dismissals “shocking” and said they raised urgent questions. “Who made this decision, and why now? Who stands to benefit if the board is left without a quorum? And what happens to the PREPA bankruptcy — and most importantly the people of Puerto Rico — if this process collapses?” he said in a statement.
Huffman said the move aligned with concerns Democrats voiced at a July 16 hearing of the House Subcommittee on Insular and Indian Affairs, where they warned that holdout bondholders were seeking a board without a quorum to derail the bankruptcy process and block meaningful debt restructuring.
“Now Trump is seemingly handing these wealthy bondholders the win, while clearing the way for fossil fuel insiders and private equity donors to take control and lock Puerto Rico into an unreliable grid, dirty energy infrastructure, soaring energy costs, and decades of pollution,” he said.
“The people of Puerto Rico have persevered through years of hardship, blackouts, and failed promises,” Huffman added. “They’ve made it clear what they want: transparency, accountability, and a voice in their own future. What the Trump administration is giving them looks like another backroom deal that puts billionaires and private equity over working families. The public deserves answers. Congress deserves answers. And the people of Puerto Rico deserve better.”
Alvin Velázquez, a bankruptcy law professor at Indiana University and a former chair of Puerto Rico’s unsecured creditors committee, told the Associated Press he questioned whether the dismissals were lawful, given Promesa’s removal standard. “What’s the cause?” he said.
At the July 16 hearing, Mujica told lawmakers the board had spent $1.4 billion on restructuring but saved Puerto Rico $60 billion, and predicted it could finish its work in four years. The session drew far less attention than in the board’s early years, when protests and heavy press coverage were common, the Centro de Periodismo Investigativo reported.
Members of Congress offered few concrete plans or follow-up commitments. Rep. Alexandria Ocasio-Cortez, Democrat of New York, pressed Mujica on PREPA’s bankruptcy, highlighting how GoldenTree Asset Management had tripled its holdings in PREPA bonds after the bankruptcy. She called the firm “the very definition of a vulture fund” and accused such investors of exploiting legal loopholes to demand $12 billion instead of the $2.6 billion the board has proposed.
Puerto Rico’s resident commissioner, Pablo José Hernández, told the panel that going nine years without a balanced budget was “a major failure” and said both the board and the island’s government were to blame. CPI said that the board has built an entrenched class of advisers, lawyers and accountants earning very high salaries, and continues to impose austerity measures without meaningful obstacles.
González has signed the first of four consecutive balanced budgets required to dissolve the board; lawmakers at the hearing pressed concerns about high power costs, persistent poverty and the stalled PREPA restructuring.
