Gov’t files bill for Puerto Rico co-ops to comply with fiscal plan
SAN JUAN – The Secretary of Public Affairs and Public Policy, Ramón Rosario, announced Thursday that the Puerto Rico government has presented a bill that the fiscal control board required for the Puerto Rico Cooperatives Supervision & Insurance Corp. (Cossec by its Spanish acronym) to comply with its fiscal plan, which was certified Aug. 4.
The measure, which does not yet appear in the legislative procedures system, which has all the presented bills, provides for putting in force Cossec’s fiscal plan, called Coop-Self, which suggests a $533 million injection into the cooperatives system. This would help to address possible losses resulting from the restructuring of Puerto Rico’s debt through Title III of the federal Promesa law.
The amount would come from $383 million in capital and $155 million would come from the sale of certain loan portfolios, according to the fiscal plan.
The bill also creates the Special Committee for the Implementation of the Fiscal Plan, which will be composed of the executive director of the Fiscal Agency and Financial Advisory Authority (FAFAA), and the Cooperative Development and Financial Institutions’ commissioners.
Although it was previously announced that the committee would replace Cossec’s board, Thursday’s press release indicated that the panel will not be eliminated. On the contrary, the committee would be created to implement the programs and reforms required by the fiscal board while maintaining the co-op supervisory board.
“With this measure, we enable the implementation of Cossec’s Fiscal Plan, ensuring that the savings and loan cooperatives that contribute so much to the economy of Puerto Rico can continue to provide excellent service” to its members, Rosario says in the written statement.
The measure also seeks to “modernize governance” at Cossec, which regulates and insures deposits in the island’s 116 cooperatives, which have more than one million clients and $7.9 billion in assets, the secretary said.
Among the changes, the fiscal board requested that the bill contain a modernization of the laws governing cooperatives to enable them to sell assets to other entities, if Cossec determines liquidation is necessary, and the issuance of preferred shares.
Another of the amendments requested by the fiscal board is geared toward ensuring that credit unions are supervised by an entity with expertise in this area, such as the National Credit Union Administration (NCUA), and that Cossec seek external assistance, including from federal agencies and advisors, to improve the entity’s practices and address the challenges related to the island’s fiscal crisis.
The cooperatives have invested some $965 million in Puerto Rico bonds, or 65 percent of their total investments totaling $1.5 billion. Most correspond to Government Development Bank (GDB) notes, which are worth 84 percent less than their original, or par, value.