Sylvette Santiago, a spokesperson for the board, did not immediately return a message seeking comment on whether the board members would fight the decision.
Meanwhile, Rep. Nydia Velázquez, a New York Democrat, criticized the dismissals though she acknowledged what she said were “serious and longstanding concerns” about actions the board has taken, including implementing austerity measures.
“This sudden purge by Donald Trump is not about justice or reform,” she said in a statement. “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.”
The board was created in 2016 under the Obama administration, a year after Puerto Rico’s government declared it was unable to pay its more than $70 billion public debt load and later filed for the biggest municipal bankruptcy in U.S. history.
In remarks to the AP, the White House official claimed the board had operated ineffectively and in secret and said it “shelled out huge sums to law, consulting and lobbying firms.” The official, who spoke on condition of anonymity to discuss the subject, also accused the board’s staff of receiving “exorbitant salaries.”
Puerto Rico is struggling to restructure more than $9 billion in debt held by the state’s Electric Power Authority, with officials holding bitter mediations with creditors demanding full payment.
It’s the only Puerto Rico government debt pending a restructuring, with the White House official accusing the board of preferring to “extend the bankruptcy.”
In February, the board’s executive director, Robert Mujica Jr., said it was “impossible” for Puerto Rico to pay the $8.5 billion that bondholders are demanding. He instead unveiled a new fiscal plan that proposed a $2.6 billion payment for creditors. The plan does not call for any rate increases for an island that has one of the highest power bills in any U.S. jurisdiction as chronic power outages persist, given the grid’s weak infrastructure.
Alvin Velázquez, a bankruptcy law professor at Indiana University, said he worries the dismissal of the board members could spark another crisis in Puerto Rico.
“This is really about getting a deal out of (the power company) that is not sustainable for the rate payers of Puerto Rico,” he said.
Velázquez, former chair for the unsecured creditors committee during the bankruptcy proceedings, also questioned if the dismissals are legal, since board members can only be removed for just cause.
“What’s the cause?” he said. “What you’re going to see is another instance in which the Trump administration is taking on and testing the courts.”
The dismissals were first reported by the Breitbart News Network, a conservative news site.
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