Sosa LLoreNs Cruz Neris OCIADOS To: House Natural Resources Committee From: José A. Sosa-Llorens, Esq. Sosa Llorens, Cruz Neris & Associates! Femando Viftas-Miranda Managing Director Samuel A. Ramirez & Co., Inc. Date: February 25", 2016 Re Policy, regulatory and legal considerations regarding the effects of Puerto Rico's fiscal crisis on state chartered Credit Unions (Cooperativas de Ahorro y Crédito) Economic context During the past two years, Puerto Rico has faced the most challenging economic circumstances in its history. These challenges include the weight of the accumulated debt and a general questioning of our governmental structures and processes, as well as of the nature and efficacy of the extant economic and political relations with the United States. The magnitude of the crisis has called upon the attention and interests of Puerto Rico’s government and society in general, of Congress and of the White House. In the more specific matter of Puerto Rico’s debt, we confront significant conflicting interests and objectives: © On one hand, creditors expect and seck full payment of the face value of their investments. For creditors that acquired their holdings at a discount, these expectations imply the realization of extraordinary profits. © On the other hand, the Commonwealth's government seeks “debt relief” to reduce the current burden of the debt service vis a vis the urgent need to maintain vital public services. These financial and budgetary pressures coincide with dwindling tax revenues due to the decade long economic contraction, even in spite of the imposition of budget couts and tax hikes The particular needs of bondholders (as creditors) and of the government (as debtor) must be seen in the broader context of Puerto Rico's economy. Accordingly, the restructuring of Puerto Presently we represent 25 of the largest and most active credit unions in the ongoing negotiations with the ‘government of Puerto Rico. These institutions have $39,287 members, over $48 billion in total assets and presence lies. They account for 56% of the assets and members of the full cooperative financial inez & Co., Ine. acts as financial advisor to these credit unionsPolicy, regulatory and legal considerations regarding the effects of Puerto Rico's fiscal crisis 2 on state chartered Credit Unions (Cooperativas de Ahorro y Crédito) February 25%, 2016 Rico's debt needs to be guided by principles of economic development and sustainability. Only through a rebuilt and sustainable economy will the government be able to fulfill its duties, including the repayment of its debts, In the end, a realistic and sustainable solution is in the best interest of all. For sure, implementation of the appropriate economic development policies will require intense discussions and difficult decisions. In the immediate short term, the ongoing renegotiation and restructuring of the public debt has direct and proximate implications for the sustainability of our economy. These implications stem from approximately twenty percent of the government's debt ($13 billion) being held by Puerto Rico’s own capital market, comprised of individual and institutional investors. In light of this reality, for the restructuring process to be consistent with the sustainability of our economy, preservation of capital in the Island and preservation of Puerto Rico’s economic infrastructure is of paramount importance.” Regrettably, the restructuring proposals publicly disclosed by the government do the opposite. Both the “Super-Bond” as well as the latest “Base/Growth Bond” proposals imply significant losses to Puerto Rico investors; losses which are proportionately higher than those requested from US investors. Implementation of these proposals would effectively amount to a loss of 57% of the par value of current holdings of Puerto Rico investors, a capital loss we estimate at approximately $7.7 billion to Puerto Rico’s economy.’ This sudden loss to Puerto Rico’s capital base would come on top of the wealth erosion of over ten years of economic recession, which has been estimated by analysts at approximately $60 to $70 billion. In addition to the harsher treatment of Puerto Rico investors, these proposals uniformly punish traditional investors while favoring speculative investing. Certainly, a more equitable approach is warranted. Entry Point restructuring We believe the goals of the proposed debt restructuring can be achieved with a fair treatment of investors and without hurting the economy if the pricing of a voluntary exchange proposed to creditors is based on each bondholder’s “Entry Point”; that is, the price at which each bondholder acquired their respective Puerto Rico bonds.‘ Recognizing the speculative interests of some investors and to encourage their participation, the Entry Point exchange offer ‘could include a modest profit margin above the entry price, never exceeding par. The exchange 2 Let us not forget thatthe governments long term ability to generate revenue is dependent upon sustained ‘economic growth. Therefore, in the end, Puerto Rico's economic sustainability is also in the best interests of creditors. Based on the financial and economic analysis of Ramirez & Co, Inc. financial advisor tothe Credit Union representative group. “Because MSRB Rule G-14 requires brokers, dealers, and municipal securities dealers (collectively, “dealers”) to report certain information about each purchase and sale transaction effected in municipal securities, there is ‘vetfable price and market data that would allow the implementation of this strategy. All the debt subject to the proposed exchange trades under rules and regulations of the US Municipal Market. Furthermore, as par of our analysis, we have found no legal provision that precludes the use ofthis novel and far Entry Point approach.Policy, regulatory and legal considerations regarding the effects of Puerto Rico's fiscal crisis 3 ‘on state chartered Credit Unions (Cooperativas de Ahorro y Crédito) February 25", 2016 would seek to match the shortest tenor of the new bonds to those investors that acquired the bonds at the lowest price. Conversely investors that acquired their bonds at par would be offered bonds of a longer tenor. This alternative pricing structure could certainly face pushback from investors seeking to profit from the seniority and rights granted to the different investor classes. However, if properly structured, any such challenge would be at a handicap to prove that a higher value was paid to Par Value Buyers, who would receive bonds of a longer tenor. A scenario prepared by Ramirez & Co., for the restructure of all GDB outstanding debt under the proposed alternative shows that GDB would receive principal payment relief over a 6-year period and would extend its tenor profile from an average life of its bonds of 4.7 years to 15.4 years. The principal reduction would amount to approximately $1,042MM or 28.5% of its total debt. ‘An Entry Point exchange offer has the following advantages: 1. It bolsters the Commonwealth's credibility and market reputation by respecting and validating the many non-speculative investors (mutual funds and retail and institutional retail investors) who for many years have backed Puerto Rico's debt issuances and who have usually bought their bonds in original issues at par value. 2. New Puerto Rico Bonds would trade at prices closer to par, as the market would be reassured of PR’s capaci ingness to service its debt. This would restore order and stability to the trading activity of Puerto Rico Bonds in the Municipal Market. Due to the reinstated market liquidity, investors would have the means to exit their positions in Puerto Rico bonds prior to maturity. 3. It allows the government to achieve “Debt Relief” across the investor spectrum where said “relief” causes no harm: the unrealized profits between the discounted entry price of Commonwealth paper and their corresponding par value. “Haircuts” in this area of “potential” (and in some instances excessive) profits impair no one; they merely prevent instances of unjust enrichment stemming from speculative activity. 4, As opposed to the “Base/Growth Bond” structure, an Entry Point pricing reduces the risk of litigation by providing a uniform exchange offer to holders of Commonwealth paper, even allowing speculators to generate a level of return on their investments. These terms ‘make it difficult for speculative investors to challenge an offer that provides a reasonable return, solely based on the fact that said offer did not provide for extraordinary gains. 5. An Entry Point exchange offer would be based on actual market prices and trading ranges for each specific issuer, thus taking into account the relative credit strength and seniority of the different types of Commonwealth bonds. The self-adjusting effect of pricing the ‘exchange offer at actual market entry points aligns the proposed exchange offer to credit seniority principles similar to those applied in bankruptcy proceedings, thus strengthening its inherent fairness.Policy, regulatory and legal considerations regarding the effects of Puerto Rico's fiscal crisis 4 ‘on state chartered Credit Unions (Cooperativas de Ahorro y Crédito) February 25", 2016 6. It would reduce the credit exposures of “Monoline” insurers, which could potentially be translated to some level of additional insurance capacity that in tum could be used by Puerto Rico for new issues, especially after the implementation of a financial oversight entity. In contrast to the equitable treatment of an Entry Point exchange offer, the latest debt restructuring proposals are damaging to traditional investors (both from Puerto Rico and the United States) that have historically supported Puerto Rico bonds, including investment companies whose shares are in the hands of individuals, 401(k) and other retirement plans. In the case of Puerto Rico investors, these losses will end up damaging Puerto Rico’s economy, therefore reducing the government’s revenues and its future debt service capacity. ‘The damaging loss of capital that would be caused to Puerto Rico’s economy by the current restructuring proposals would be further amplified by the impairment to the regulatory capital of Puerto Rico's state chartered credit unions, which as we all know constitute one of Puerto Rico’s main institutional investors of Commonwealth bonds. Furthermore, they constitute a key component of Puerto Rico’s financial system, facilitating financial intermediation, providing savings and lending products to over one million members and depositors, including a high proportion of low to medium income families and senior citizens. In fact, studies by Puerto Rico’s credit union regulator indicate that a majority of members is over 55 years of age. The role of credit unions has become ever more important in light of the contraction of Puerto Rico's commercial banking sector and the ensuing reduction of bank credit during the last decade. Puerto Rico’s credit union system Puerto Rico’s state chartered credit unions originated in the 1940s and 1950s and were promoted by the government's New Deal policies as a tool for community-based social and ‘economic development. Accordingly, our major credit unions have more than fifty years of continuous operations, with some of them having reached their 65" anniversaries. Puerto Rico's Cooperative Movement is mostly comprised of these state chartered credit unions, which currently total 116 institutions. Since their foundation, Puerto Rico’s state chartered credit unions have maintained steady growth, even without any sort of shares and deposit insurance. After four decades of development, in 1980 the government established a shares and deposit insurance program.’ As of September 2015, Puerto Rico's system of 116 state chartered credit unions have: + Originally, the insurance program was an integral part ofthe Office ofthe Inspector of Cooperatives. In 1990 the ‘program was segregated into a public corporation chartered under Act 5 of January 15, 1990. Until 2001, the shares ‘and deposit insurance corporation acted a a secondary supervisor, with the Inspector of Cooperatives (and later on, the Commissioner of Financial Institutions) acting as primary supervisor. With the approval of Act 114 of August 17, 2001, as amended, supervisory functions were consolidated into the Public Corporation for the Supervision and Insurance of Cooperatives (COSSEC, under its Spanish acronym), Presently, shares and deposits are insured up to $250,000 by COSSEC. It also has supervisory and regulatory authority.Policy, regulatory and legal considerations regarding the effects of Puerto Rico's fiscal crisis 5 on state chartered Credit Unions (Cooperativas de Ahorro y Crédito) February 25", 2016 © 966,274 members,® * total assets of $8.47 billion, ‘© total shares and deposits of $8.09 billion, and «© arisk weighted regulatory capital of $342 million.” nancial analysis and stress tests of the system show that its core components (including COSSEC) are healthy, safe and sound, except for the risk associated with Commonwealth paper. This risk comes from the government's condition and not from the credit unions themselves and reparation of this risk is part of the government’s inherent duty to protect the safety and soundness of financial systems and of preserving the savings of members and depositors. Let us not forget that a majority of the system's members and non-member depositors are low to middle income working families and senior citizens. This brings us to a brief discussion of the current regulatory and supervisory framework applicable to Puerto Rico's credit unions. Regulatory Framework Since its inception, the shares and deposit insurance has been solely funded by the credit unions themselves, with no expenditure of public funds. Since the founding of Puerto Rico’s credit union system (both before and after shares and deposit insurance), all receiverships and liquidations of credit unions have been handled and funded by the credit unions themselves. This is in stark contrast with the commercial banking sector in the Island, particularly during the last decade. In 2010 three banks were closed, with a fourth one being closed in 2014, at a cost to the FDIC in excess of $6 billion. These liquidations represented 25% of the banking assets and amounted to one third of the 2010 FDIC losses nationwide." These costs were in addition to the $1.4 billion TARP assistance granted to the two largest banks (Banco Popular de Puerto Rico and FirstBank). These losses were mainly attributable to lending decisions made by these banks while under the direct supervision of federal and state banking regulators (that is, Puerto Rico's Commissioner of Financial Institutions, the FDIC and the Federal Reserve.) Contrary to the serious losses of the banking system, Puerto Rico's credit unions have shown a steady pattern of growth based on their core business of serving their members and their communities. As stated before, the risks posed to credit unions by their holdings of Commonwealth debt stem from the fiscal difficulties of the government and not from the credit © Upon adding non-member depositors, we reach L.1 million stakeholders. This does not include member shares, a portion of which eannot be withdrawn by members. Also, additional capitalization ofthe system resides with COSSEC. One Fourth Of Puerto Rico's Banking Industry Collapses”, April 30, 2010, Bill Zielinski. ‘tp//problembanklist.com/one-fourth-of-puerto-rco-banking-industry-collapses/; “Regulators close banks in Puerto Rico, Mich., Mo.", April 30, 2010, Marcy Gordon, Bloomberg Business, hup/vww businessweek. com/ap/financialnews/D9FDNS280 htm; “F.D.L.C. Closes and Sells 3 Puerto Rican Banks", By Dealbook, April 30, 2010, http:/dealbook.nytimes.com/2010/04/30/f-d-i-c-sels-3-troubled-pucrto- ‘ean-banks”?_r-0; Bank eure Feday — PR banks go down" Rolfe Winker, April 30,2010, /Mologs reuters convolfe-winklen/2 failuresPolicy, regulatory and legal considerations regarding the effects of Puerto Rico's fiscal crisis 6 ‘on state chartered Credit Unions (Cooperativas de Ahorro y Crédito) February 25", 2016 union's lending activities. Their only fault was to heed to the government's call in 2009 to significantly increase their holdings of government paper. This call was “promoted” by COSSEC,? who induced a concentration of Puerto Rico bonds through the issuance of circular letters extolling the virtues of Commonwealth paper and anticipating “grandfathered” regulatory status for these investments.'° Time has confirmed the inappropriateness of these regulatory actions and the risks resulting from having relied on them. ‘As the government's fiscal crisis deepened, during the past two years COSSEC has taken limited action regarding the risks at hand. Two circular letters were issued to limit distribution of dividends and to require additional reserves based on the amount of unrealized losses. In fact, these actions reneged the regulatory grandfathering announced in 2009. In anticipation of a long, complex and protracted process of renegotiation and restructuring of Commonwealth debt, the leadership of Puerto Rico’s credit unions discussed with COSSEC the adoption of a special statutory accounting rule to allow for an orderly ‘management of these investments, The rule was adopted by COSSEC on August 4, 2015 and ‘was also enacted as an amendment to Act 255 of October 28, 2002, as amended," by the Legislature and signed by the Governor on December 15, 2015. The rule provides for the segregation of these “Special Investments” and requires specific monitoring by the boards of directors of each credit union. It provides that these investments be accounted at their “historic, cost” and classified as “held to maturity” and allows amortization of realized losses up to 15 years. If the credit union chooses to amortize realized losses, additional reserves are required ‘based on the amount of regulatory capital of each credit union. Also, distribution of dividends is restricted based on the amount of regulatory capital and the risk level of each credit union. This special rule seeks to strike a balance between the creation of additional reserves and the distribution of modest amounts of dividends to preserve the system’s traditionally high liquidity ratios obtained through member shares. In the absence of a reasonable restructuring, proposal or of concrete capital assistance (as the one that was provided to commercial banks by the US Treasury pursuant to Congressional action), the rule secks to provide credit unions with a reasonable timeframe for the handling of these extraordinary conditions. Even though the regulatory space provided by the accounting rule is an important tool for Puerto Rico’s credit unions, it was never thought to be the sole and definitive solution to the ° Investments in Commonwealth paper by Puerto Rico credit unions tripled from 2009 to 2012 due to government actions, which included (among others) (i) the offer and sale of unsuitable taxable investments to the tax exempt ‘cooperatives (many of which are not eligible to be considered accredited investors); (ji) improper use of regulatory ; (ii) threats of punitive taxation; and (iv) active inducement through COSSEC’s issuance of circular letters promoting the acquisition of PR paper and increasing the regulatory limit for these investments. Bear in mind that a representative of the GDB, appointed by the bank’s president, has been and continues to be a ‘member of COSSEC’s Board of Directors, with fll participation in policy and regulatory decisions and subject to fiduciary duties. The Commissioner of Financial Institutions is also a voting member of COSSEC’s board of | liectors. ‘© Furthermore, statutory and regulatory provisions limited other investment options and essentially geared the ‘system towards Puerto Rico pape 1W This is the statute under which Puerto Rico's credit unions are chartered and regulated.Policy, regulatory and legal considerations regarding the effects of Puerto Rico's fiscal crisis 7 on state chartered Credit Unions (Cooperativas de Ahorro y Crédito) February 25", 2016 financial risk at hand nor was it drafted to deal with the magnitude of capital loss implied by the current restructuring proposals disclosed by the government. In their application to the credit ‘union system, these proposals are completely inconsistent with the government's duty to preserve and protect depository institutions and the shares and deposit insurance program. A clear example of the imperative need and public duty of protecting depositors and deposit insurance programs can be found in the extraordinary measures and affirmative actions taken by Congress and the federal government in 2008 to preserve the banking and financial system of the United States. A similar active role was played by the National Credit Union Administration (NCUA) in 2009 to safeguard the corporate credit union system, whose distressed asset exposure was between $50 and $65 billion. In the case of Puerto Rico’s credit union financial system, this economic and policy mandate is bolstered by the fact that the risks at hand arise from the government's difficulties and not from speculative business decisions by the credit unions. In this sense, the government's obligations to protect Puerto Rico’s credit union financial system is in the nature of reparations and not of a bailout or preferential treatment. We believe that the obligation to protect and preserve Puerto Rico’s credit union system and its shares and deposit insurance is an inherent public function, duty and obligation of the Commonwealth that is separate, additional and goes beyond the strictly financial obligations of the bonds acquired by the credit unions at the government's “calling”. In light of the high participation of senior citizens as part of the credit unions’ membership, the duty to protect the soundness of the system is heightened by the policy objectives of the Older American Act, which states as follows: TITLE |_DECLARATION OF OBJECTIVES; DEFINITIONS DECLARATION OF OBJECTIVES FOR OLDER AMERICANS Section. 101. The Congress hereby finds and declares that, in keeping with the traditional American concept of the Inherent dignity ofthe individual in our democratic society, the older people of our Nation are entitled to, and it le the joint and several duty and responsibility of the governments of the United States, of the several States and their political subdivisions, and of Indian tribes to assist our older people to secure ‘equal opportunity to the full and free enjoyment ofthe following objectives (1) An adequate income in retirement in accordance with the American standard of living. (2) The best possible physical and mental health which science can make avalable and without regard to ‘economic status. @) Obtaining and maintaining suitable housing, independently selected, designed and located with reference to special needs and available at costs which older citizens can afford. (4) Full restorative services for those who require institutional care, and a comprehensive aray of ‘community-based, long-term care services adequate to appropriately sustain older people in their ‘communities and in their homes, including support to family members and other persons providing voluntary Care to older individuals needing long-term care services. (8) Opportunity for employment with no discriminatory personnel practices because of age. (6) Retirement in health, honor, dignity—after years of contribution to the economy. (7) Participating in and contributing to meaningful activity within the widest range of civic, cultural, ‘educational and training and recreational opportunities. (8) Efficient community services, including access to low cost transportation, which provide @ choice in ‘supported living arrangements and social assistance in a coordinated manner and which are readily avallable when needed, with emphasis on maintaining a continuum of care for vulnerable older individuals.Policy, regulatory and legal considerations regarding the effects of Puerto Rico's fiscal crisis 8 on state chartered Credit Unions (Cooperativas de Ahorro y Crédito) February 25", 2016 (9) Immediate benefit from proven research knowedge which can sustain and improve health and happiness. (10) Freedom, independence, and the free exercise of individual iniative in planning and managing their ‘own lives, full participation in the planning and operation of community based services and programs. provided for their benefit, and protection against abuse, neglect, and exploitation. 7 Clearly, the safeguarding of the savings of senior citizen credit union members and depositors is particularly important to advance these congressional objectives. Additional policy considerations The congressional discussions on Puerto Rico's debt crisis have centered around two main issues: ‘* First, whether or not to allow access to bankruptcy procedures, and ‘* Secondly, whether or not to create a financial control or oversight board. With respect to the first issue, we find no legal, economic, financial or political reason that justifies impeding access to an orderly judicial debt resolution mechanism. However, we feel that bankruptcy proceedings should come after having exhausted voluntary and good faith restructuring efforts, which we feel should be based on Entry Point pricing of exchange offers. We feel that said efforts have a better probability of restoring market access for the Commonwealth, In the case of the credit union financial system, an Entry Point restructuring will ameliorate impacts to regulatory capital and should reduce the costs of safeguarding depositors and members, To enable Commonwealth policy actions to solve these systemic risks, we anticipate that federal support will be needed in the form of financial resources and guarantees as well as in technical oversight and assistance from the US Treasury in coordination with NCUA. Involvement of these agencies may require Congressional authorization and we advocate such consideration by the Committee. With regards to the second issue, we believe that the creation of an oversight body needs to respect the constitutional order of the Commonwealth. By the same token, the authority and powers of the Commonwealth's government carry with it equally important duties and responsibilities. That being said, we must all recognize the usefulness of an oversight body with political independence to facilitate the difficult decisions that lie ahead, a situation analogous to the federal experience of the Base Closure and Realignment Commission (BRAC). Therefore, we would favor the creation of a joint commission or authority created pursuant to the combined action of the federal and Commonwealth legislative and executive branches, with a mandate to restructure the Commonwealth's debt in an open, transparent, apolitical, and fair manner. tion of both jurisdictions in the creation of this Joint Commission would strengthen its 42 U.S.C. 3001Policy, regulatory and legal considerations regarding the effects of Puerto Rico's fiscal crisis 9 ‘on state chartered Credit Unions (Cooperativas de Ahorro y Crédito) February 25", 2016 legitimacy, should reduce ideological and political attacks and would imply a mutual ‘commitment to implementation of the necessary measures to ensure economic growth and fiscal health. Of equal importance is the need to clearly define the role and mandate of the proposed body. With regards to the financial situation of the Commonwealth, this oversight body should assure the accuracy and transparency of the data regarding the Commonwealth and its Instrumentalities so that all constituencies can have confidence in the information that will be used to formulate appropriate courses of action. The oversight body should also secure compliance by the Commonwealth’s government with budgetary objectives. '? Likewise, an oversight body cannot limit its role to the mere identification of repayment options, as these financial obligations must be weighted and balanced against the public interest of maintaining services that are essential to the dignity of a democratic society. These interests include securing and maintaining fundamental health, security and education services. These are human needs that come before and are a prerequisite to the ability to carry out economic activity. Let us not forget the tragic and unforgivable case of Flint, where basic health safeguards were abandoned in the name of financial efficiency. In Puerto Rico, the security and lives of 3.5 million citizens is at stake, a full third of which are members and depositors of Puerto Rico’s credit union financial system. Finally, the creation of an oversight entity needs to be complemented with economic development tools to reverse the decade long recession as well as the fair and equitable funding of health programs. Conclusion Having been founded during one of Puerto Rico’s direst economic periods, our credit unions have weathered the many challenges of prior economic downtums while keeping their commitment to the social and economic well-being of its members. These are the values that guide us in the search for practical and feasible alternatives to face Puerto Rico’s economic challenges. Based on these values, we recommend that policy actions be based on the preservation of the foundations of Puerto Rico’s economy. In our view, this requires in the first instance good faith voluntary debt restructuring proposals that are based on Entry Point pricing, as a means of reconciling the government's objective of “debt relief” with equitable treatment of creditors. With regards to credit unions, this process should be accompanied by public policy initiatives to "9 Considering that these important tasks may require a significant amount of time, Congressional legislation should consider mechanisms to implement a two-year interest only moratorium period on the debt currently considered for restructure. Such a measure would decrease budgetary pressures over the Commonwealth and grant sufficient time for the oversight body's assessments and allow for the applicable governmental transitions in Puerto Rico and the United States.Policy, regulatory and legal considerations regarding the effects of Puerto Rico's fiscal crisis 10 on state chartered Credit Unions (Cooperativas de Ahorro y Crédito) February 25", 2016 protect and preserve the regulatory capital and resources of this financial system and of the shares and deposit insurance fund. We acknowledge that these priorities may require federal assistance, especially considering imminent maturities that become due within the coming months. Puerto Rico’s credit unions are willing and able to actively work, participate and assist in the formulation of these policy decisions that will certainly define the future of Puerto Rico and its relationship with the United States. José A. Sosatlorens has over 25 years of experience in corporate and financial law. He served as Commissioner of Financial Institutions of the Commonwealth of Puerto Rico and was @ member of the Conference of State Bank Supervisor, ofthe Latin “American Center for Monetary Studies and chaired the Board of Directors of Puerto Rico's Creit Union Shares and Deposit Insurance Corporation (1980-1992). He has counseled and represented Puerto Rico Credit Unions for more than twenty yeas. He was adjunct professor of Banking and Financial Institutions Management (University of Puerta Rico MBA Program) and Vsting, Professor of Corporate Law (Interamerican University of Puerto Rico School of Law) and Financial institutions Law (Catholic University of Puerto Rico School of Law/. He is a graduate of Catholic University of Puerto Rico (B.B.A, 1982; 10, summa cum laude, 1986) and of Harvard Law School (LLM, 1987) Femando Vifas-Miranda has over 25 years in corporate and publi finance, investment banking and asset management. Has served as Resident Vice President for Citibank (1987 ~ 1988), Vice President of the Chase Manhatten Bank NA (1990-1958), Senior Vice President at BBVA - BBVA Securities (1998-2007) and Senior Vice President / Managing Director at Samuel A Ramiez 4 Co, and Ramirez Asset Management (2007 — Present). Has acted as Co-Senior manager, Co-lead Bank, Lead Manager, Sole Underwriter and Lead Bank of multiple municipal and corporate finance transactions. Holds 3 BA, Economics from the University (of Puerto Rico (3975 ~ 1975) and a Masters of Economics from Penn State University (2979 ~ 1981).