Obama Signs PROMESA Creating Unelected Fiscal Control Board to Govern Puerto Rico's $72 Billion Debt Crisis

President Barack Obama signed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) into law, establishing a seven-member Financial Oversight and Management Board with sweeping powers over Puerto Rico’s government. The board, appointed by the U.S. President rather than elected by Puerto Ricans, was granted extraordinary authority to suspend collective bargaining agreements, lower minimum wages, override labor laws, veto budgets, and mandate austerity measures to restructure $72 billion in debt and $55 billion in unfunded pension liabilities. Critics immediately condemned PROMESA as ‘a collection agency for hedge fund vultures’ and a colonial imposition that stripped democratic governance from 3.4 million U.S. citizens. The board’s composition—four Republicans and three Democrats, all unpaid volunteers—was dominated by appointees friendly to financial interests with no direct accountability to Puerto Ricans. PROMESA exempted the board’s advisers from conflict-of-interest disclosure requirements that applied to all other bankruptcy professionals, creating a loophole that would enable massive consulting contracts worth hundreds of millions. The board became known colloquially in Puerto Rico as ’la junta,’ evoking Latin America’s history of authoritarian military rule. The legislation represented a dramatic expansion of federal control over a U.S. territory, establishing what critics called ‘a parallel government full of lawyers and consultants’ operating in secret. Within months, the board would hire McKinsey & Company as its lead strategic adviser, paying over $1 million monthly for consulting services while McKinsey’s investment subsidiaries held millions in Puerto Rico bonds—conflicts that would trigger SEC investigations and fines years later.