“La junta”…is the federally appointed body with ultimate power over Puerto Rico’s finances. Its decapitation throws the island’s fragile recovery into chaos.
Artículo publicado en Non for Profit Quarterly, el 11 de agosto de 2025
The news left many wondering: What else is going to happen to us now?
In a move that sent shockwaves from San Juan to Wall Street, President Donald Trump fired five members of the Financial Oversight and Management Board for Puerto Rico.
“La junta”…is the federally appointed body with ultimate power over Puerto Rico’s finances. Its decapitation throws the island’s fragile recovery into chaos.
To most Americans, this might sound like a bureaucratic inside game or partisan squabble. But for 3.2 million US citizens in Puerto Rico, it signals the start of a dangerous new chapter in the community’s decade-long struggle for survival.
What’s at Stake?
The oversight board exists because Congress in 2016 passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA Act) to enable the Commonwealth to use a quasi-bankruptcy process to settle and reduce its debts.
“La junta,” as the board is colloquially and often contemptuously called, is the federally appointed body with ultimate power over Puerto Rico’s finances. Its decapitation throws the island’s fragile recovery into chaos and fuels a pervasive fear: that this is a calculated move to benefit powerful hedge funds at the expense of the Puerto Rican people.
“The government of Puerto Rico must achieve four consecutive balanced budgets to demonstrate to the United States Congress and the American people that it can operate with fiscal responsibility and within the rule of law. What was at stake in 2016 remains the central issue today,” Javier Ortiz explains to NPQ. Ortiz is a business consultant and political strategist based in Washington, DC.
The five dismissed board members are all locals: Arthur J. González, Cameron McKenzie, Betty A. Rosa, Juan A. Sabater and Luis A. Ubiñas. The dismissals were first reported by Breitbart News and Bloomberg. All five are Democrats; the two who remain—Andrew G. Biggs and John E. Nixon—are Republicans. McKenzie, the most recent appointee, was named late last year.
“Bondholders…question the management of the bankruptcy. Then Trump … dismisses those members of the Board. This is not a coincidence.”
Eva Prados—a lawyer, prominent critic of the oversight board, and newly elected leader of the Movimiento Victoria Ciudadana (Citizens Victory Movement) political party—outlined for NPQ some of the factors that may have motivated the firings.
“We have been denouncing the board’s exorbitant spending on salaries and contracts for nine years, while they impose austerity on the people of Puerto Rico,” Prados said. “But something changed now, and what changed was the bankruptcy [debt restructuring] of the Puerto Rico Electric Power Authority (PREPA), the final piece of Puerto Rico’s bankruptcy. This is the stalemate.”
Prados explained that the impasse pits the board against powerful bondholders. After concluding that the island’s people and economy cannot sustain higher electricity rates, the board secured a court-approved plan to cut the electric utility’s debt by over 70 percent. However, large bondholders like the hedge fund GoldenTree, which bought the debt at a discount, are demanding a $12 billion payout funded by rate hikes.
Prados argues that Trump’s decision to dismiss board members is a direct consequence of this conflict. “When bondholders like GoldenTree couldn’t get the court or the board to validate what they wanted, they suddenly began to question the management of the bankruptcy. Then Trump comes out and dismisses those members of the board,” Prados stated. “This is not a coincidence.”
The Problematic “Junta”
To understand the gravity of this moment, a little background about “la junta” is helpful. It was created to address Puerto Rico’s $72 billion debt—a debt that accumulated in part because restrictive US federal laws like the Jones Act have restrained economic development for decades. In 2016, under PROMESA, the US Congress created the board with a dual mandate to restructure the debt and enforce fiscal discipline.
The board is often called a “fiscal dictatorship” because its unelected members control the island’s budget, education, pensions, and energy system. This is why there are widespread demands for a full audit and for the board to be held accountable.
From its inception, the board has been a symbol of a bitter reality for many Puerto Ricans—a colonial imposition that strips elected officials of their power. Its austerity measures—pension cuts, budget slashes for the public university, and shuttered schools—have been deeply painful. “Yet, for all its controversy, it represented a structured, yet grueling, path through bankruptcy. Now, that path has crumbled,” admitted Prados.
Weeks ago, Robert Mujica, the board’s executive director, made a stunning admission in congressional testimony. While emphasizing the need for fiscal responsibility, he confirmed the board has spent over $2 billion on consultants and lawyers since the bankruptcy process began. In other words, the very entity created to “save the country” has instead spent nearly a decade bleeding it dry while enriching elites.
“The fear is that a new, friendlier junta will…force Puerto Ricans to pay back a larger portion of the debt.”
The Timing of the Firings
The timing of these firings is what set off alarm bells across the island. The ousted board members were deep in the most complex and critical phase of their work: negotiating a massive restructuring of the debt held by the PREPA, Puerto Rico’s long bankrupt and notoriously inefficient public power utility.
The core of these negotiations is determining the “haircut,” or how much of a loss bondholders will be forced to accept. Many of these bonds are no longer held by individual investors but by hedge funds, which bought the debt for pennies on the dollar, gambling on a large payout.
“This ultimately means that the bondholders will make us pay higher electricity rates, which will undoubtedly damage the island’s economy. This move also aligns with Trump’s policy of promoting natural gas, as these firings will likely pave the way for new contracts that Puerto Rico will be forced to sign with producers,” Rolando Emmanuelli, a law professor and attorney who specializes in PROMESA litigation, told NPQ.
“The new Board members will be more sympathetic to the bondholders and will push to cut public spending dramatically. Undoubtedly, the fear is that a new, friendlier junta will broker a deal that will force Puerto Ricans to pay back a larger portion of the debt. But where would that money come from? From us.”
Emmanuelli argued that higher rates will affect all companies, businesses, and industries that will pass those costs to their customers, making everything more expensive.
“We’re truly stuck, and imposing such dramatic austerity measures and cost-of-living increases would be devastating for Puerto Rico’s economy,” said Emmanuelli.
And all this is happening while the power grid is already failing. For the summer of 2025, LUMA, the private energy company created after PREPA’s bankruptcy, is predicting 90 blackouts, up from 20 the year before.
Tumultuous Times Ahead
The immediate effect of the firings is paralysis. Without a quorum, the board cannot make major decisions. Debt negotiations are frozen. The fiscal plans that dictate the island’s budget are in limbo. This uncertainty is poison to an economy already on life support.
“The board’s costs are unacceptable, but so are the bondholders’ abusive demands, which will only raise electricity rates and the cost of living in Puerto Rico,” said Prados.
“For us in Puerto Rico, this is not a political game. It’s about our pensions, the future of our university, the reliability of our power, and the price we pay for it. Washington has once again reminded us that, ultimately, someone else is in control. And as we brace for impact, the one thing that feels certain is that more tumultuous times are ahead,” she added.
About the author
Sandra Rodríguez Cotto
Sandra Rodríguez Cotto is an award-winning investigative journalist and author with over 30 years of experience in all types of media covering Puerto Rico, the Caribbean, United States, and Latin America. In 2024, she was awarded by the University of Puerto Rico with the first-ever residency on Afro-descendants where she investigated the first Afro-journalists in Puerto Rico from 1800 to the present day. Rodríguez also collaborates with various professional and community-based organizations, particularly with the deaf community and people with disabilities.
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