Former Lazard Ltd. investment banker Stephen Campbell is joining the U.S. Treasury to work on domestic finance issues including Puerto Rico’s fiscal crisis, a department spokesman said.
Campbell began June 1 as a counselor in the Treasury’s domestic finance office, working with Antonio Weiss, also a former Lazard banker. Weiss serves as an adviser to Secretary Jacob J. Lew after failing to win Senate confirmation to be undersecretary for domestic finance.
Weiss and other Treasury officials have traveled to Puerto Rico recently as the commonwealth faces a potential cash crunch and struggles with $72 billion in debt. The Treasury is offering Puerto Rico advice on how to help ease its budgetary burdens and ensure the U.S. territory receives all federal funding that’s available, while refraining from any extraordinary rescue measures.
Campbell was a managing director in Lazard’s financial institutions advisory group until July 2013 and then served as a senior adviser to Lazard until May, Lazard spokeswoman Judi Frost Mackey said by phone Thursday.
While Treasury is limited in the assistance it can provide Puerto Rico, having another person looking into the commonwealth’s financial woes may help, said Matt Fabian, a partner at Concord, Massachusetts-based Municipal Market Analytics Inc.
“At least they haven’t withdrawn resources, that’s a good sign,” Fabian said.
Lew urged Puerto Rico officials in April to develop a “credible” fiscal-year 2016 budget that addresses near-term needs, and also implement a long-term fiscal plan.
Puerto Rico’s junk-rated electric utility is weeks away from owing a $416 million debt payment. The Puerto Rico Electric Power Authority, called Prepa, has been negotiating with insurers, banks and bondholders since August on ways to revamp its operations and finances. The power provider said this week that it isn’t generating enough cash to service its $9 billion of obligations.
Meanwhile, Puerto Rico last month approved a bill that increases the cash-strapped island’s sales tax, a step that would help balance the budget. Lawmakers must pass a balanced budget by June 30 and the commonwealth is on the hook for a $630 million payment to bondholders July 1.
Puerto Rico debt has traded at distressed levels for almost two years on speculation the island won’t be able to repay its obligations on time and in full.