In August, President Donald Trump fired six out of seven members of an oversight board responsible for overseeing Puerto Rico’s finances. As replacements for these commissioners loom, major Republican donors could win billions of dollars due to the board’s control over their financial interests.

Former oversight board member Andrew Biggs, a Republican appointee and the last of the six to be dismissed, told the Washington Examiner that he has “no doubt” that the bondholders wanted him and his colleagues axed.

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“It’s in their interest to get a more bondholder-friendly board,” he explained. 

Congress established the Financial Oversight and Management Board for Puerto Rico after it passed the Puerto Rico Oversight, Management, and Economic Stability Act of 2016 with bipartisan support. PROMESA empowered the oversight board to revise and approve Puerto Rico’s budgetary actions, including agreements on how the commonwealth should pay its massive debts to hedge funds and asset management firms.

One of the most recent debt-related spats involving the oversight board concerned the government-owned Puerto Rico Electric Power Authority. Prior to the wave of firings, the oversight board was attempting to restructure PREPA’s debt to wind down its obligations from roughly $9 billion to $2.6 billion. Bondholders adamantly opposed this move, arguing that PREPA could pay far more, whereas the oversight board maintained that PREPA’s revenue made paying out a greater sum untenable without raising electricity rates beyond what Puerto Ricans, who have a lower average income than Mississippians, could reasonably pay. 

These same bondholders, who some speculate privately pushed for the firings, are led by wealthy GOP donors and could gain immensely if a more favorable settlement can be struck. 

Bondholders are demanding roughly $12 billion from PREPA, well above what the board was willing to pay out before the firings. GoldenTree Asset Management, specifically, leads a coalition of fellow bondholders asking for “no less than $3.7 billion” in cash from PREPA. 

Steven Tananbaum, GoldenTree’s current chief investment officer, founded the asset management firm in 2000. Since 2019, Tananbaum and his wife have contributed roughly a quarter of a million dollars to various Republican political committees, including maximum donations to Vice President JD Vance’s 2022 Senate campaign. Other senior employees at GoldenTree, among them partners as well as the firm’s CEO and general counsel, contributed close to an additional quarter million dollars to GOP committees over the same period. 

Academic studies have found that political donors typically enjoy better access to elected officials than ordinary constituents, enabling them to privately pressure those in power to achieve favorable outcomes for themselves. 

There is evidence to suggest that corporations believe making contributions can net them favorable policy outcomes: A 2019 academic paper found that corporations increase their political contributions after regulatory agencies hit them with penalties, suggesting that donations may serve as a strategy to mitigate future enforcement risk. Another study, this time from 2021, lends some credence to such a donation strategy, finding that firms run by major political donors receive preferential treatment from the federal government.

BlackRock also owns a considerable share of PREPA’s debts and has actively participated in restructuring discussions. Like GoldenTree, BlackRock is seeking to increase the amount of debt it can recover from Puerto Rico — an aspiration that the oversight board stood in the way of. 

Executives and other top-level employees at BlackRock contributed roughly $820,000 to Republican political committees between 2019 and the present. Among these contributions were $30,500 from CEO Larry Fink, $358,900 from the chair of BlackRock’s immensely popular exchange-traded funds, and $116,850 from the firm’s chief investment officer of global fixed income.

In addition to donations from its executives, BlackRock also runs a corporate PAC that pushes hundreds of thousands of dollars to Republicans each year, granting the asset management giant further sway in GOP circles. 

Other Puerto Rican bondholders run by large GOP donors include Canyon Capital Advisors and Aurelius Capital.

Aurelius, for its part, has a storied history with the oversight board. It previously brought a highly publicized case against the board to the Supreme Court. The hedge fund sought to have the board dissolved after growing dissatisfied with its handling of Puerto Rico’s debt obligations, which it has a significant interest in. The Supreme Court ultimately rejected Aurelius’s argument that the oversight board was unconstitutional. 

The anonymous White House official who leaked the news of the firings to Breitbart News claimed that financial inefficiency was the president’s rationale for dismissing the board members.

“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,” the official told Breitbart News.

In a widely circulated series of social media posts, right-wing activist Laura Loomer echoed similar talking points, arguing that the board was more expensive than it was worth by highlighting the nearly $2 billion it had spent on staffing and litigation over the last 10 years. Before July of this year, Loomer had not mentioned anything about Puerto Rican debt on X.

Some have speculated that outside actors with a financial interest in the debt restructuring paid Loomer to post allegations about Puerto Rico and other topics, which she has adamantly denied. A White House source speaking to Bloomberg also denied that Loomer’s posts had anything to do with the oversight board firings. Some reporting has suggested that the activist’s sway over the president is waning. 

While Loomer and the White House have zeroed in on the board’s alleged financial inefficiency, Biggs says that, to his knowledge, such claims weren’t brought before the board ahead of the firings.

“I am not aware of the board having been contacted by anyone in the administration regarding these supposed complaints, or how much was spent on litigation, how long it had taken, and so forth,” the former board member told the Washington Examiner. Biggs said that financial inefficiency was not mentioned in his termination email. 

MICHAEL BLOOMBERG GAVE BIDEN $19 MILLION. A MONTH LATER, HIS COMPANY WON A MAJOR REGULATORY VICTORY 

Another source close to the oversight board provided the Washington Examiner with a preliminary fact sheet, which shows that the board estimates having saved Puerto Rico $72 billion, well above the costs pointed out by Loomer and other critics, since its inception. $3.9 billion alone came from government headcount reductions, with an additional $2.6 billion coming from streamlining government procurement procedures — achievements not unlike those touted by the Department of Government Efficiency. 

The White House did not respond to a request for comment.