Former New York Lt. Gov. Richard Ravitch has been a leading voice in advocating that the Puerto Rican government be allowed to restructure and avoid payment on its massive debts to creditors. His expertise on distressed debt dates back to the New York City financial crisis of the 1970s, and his current calls for restructuring have gained much attention in Washington.
And throughout the debate on Puerto Rican debt, Ravitch has professed that he has no conflicts of interest, presumably in an effort to be seen as dispensing his wisdom from a kind of financial Mount Olympus. “I represent none in this matter. I am not compensated for the time I have spent in the last year examining the fiscal situation in Puerto Rico,” Ravitch told the Senate Judiciary Committee in a December 1, 2015 hearing.
But now a prominent watchdog group in Washington is sharply questioning Mr. Ravitch’s claims of objectivity and independence, sending a letter to the Senate Judiciary Committee about the potential interests that he may have on the island, even as he advises the government on a financial matter that is reverberating from San Juan to Washington to Wall Street.
In a letter to the committee’s chairman, Senator Charles E. Grassley, Ken Boehm, the chairman of the National Legal and Policy Center, suggests that Ravitch’s extensive work on behalf of the island – he is providing counsel pro bono — may be explained by deeper financial ties or associations. In his letter, Mr. Boehm pointedly questioned Mr. Ravitch’s claim of independence during the Judiciary Committee hearing.
“While that statement may be technically true, it sidesteps a host of relationships of Mr. Ravitch which appear to undercut the claim of independence,” Mr. Boehm wrote.
Boehm then goes on to point out that Ravitch sits on the board of directors for Build America Mutual Assurance Company. BAM is owned by White Mountains Insurance Group, and it has other significant financial arrangements with White Mountains subsidiaries. While BAM has no direct exposure to Puerto Rican debt, its parent and sister companies do.
Boehm adds in his letter to Senate Judiciary Committee Chairman Chuck Grassley: “The resolution of the Puerto Rican debt crisis will have a major impact on at least two of BAM’s competitors for municipal bond insurance business. By any reasonable yardstick, that outcome therefore should affect BAM’s business in a significant way.”
Ravitch did not respond to a request for comment from InsideSources.
A spokesman for BAM declined to offer comment.
Ravitch has been a pro bono consultant to Gov. García Padilla’s administration, according to an article from Vice News. But he has sought to stress his independence, recently telling The Bond Buyer that he is not representing any interest in the Puerto Rico debate.