GDB Gains Immunity; Loses Leader

Puerto Rico's legislature, anticipating controversial decisions on the commonwealth's debt lie ahead for the Government Development Bank, passed a bill to immunize the institution's leaders against lawsuits.

Both houses of the Puerto Rico legislature on Tuesday approved a bill giving immunity to the GDB's leadership and its employees, as long as their actions are taken in good faith and don't show gross negligence.

Legislative staff members and local news reports have said immunity was essential, as the GDB leadership may be forced to decide which securities to default on this summer. One Puerto Rico Senate staff person said the move stemmed from a concern that the GDB leaders might have chosen to resign rather than risk being sued over their decisions.

The bill, PS 1350, has other measures concerning the GDB. It covers its leadership, lending practices, and requirements for municipalities to provide information to it. Gov. Alejandro García Padilla sponsored the original bill.

Separately, GDB's chairman of the board, David Chafey, said Wednesday he would resign for "personal reasons," effective next Tuesday.

"I have greatly enjoyed working with the dedicated team at the GDB and am proud of the many achievements made during my tenure as chairman," he said in a press release. "The GDB has played a critical role in addressing the fiscal challenges facing Puerto Rico, and I am confident that the leadership at the GDB will continue its tireless work towards that end. "

President of the GDB Melba Acosta Febo said, "We thank David for his many contributions as chairman and wish him the best. I and the rest of the GDB team and board of directors remain focused on the challenges at hand and are committed to our efforts to restore fiscal health and economic growth in Puerto Rico."

Chafey has served as the chairman since the start of the administration of Gov. Alexandro García Padilla in January 2013. Prior to his work at the GDB he was president of Banco Popular de Puerto Rico and chief operating officer of its parent company Popular, Inc. Banco Popular is the largest bank in Puerto Rico.

Chafey is the GDB's second leader to resign during the García Padilla administration. Then-GDB president Javier Ferrer resigned in July 2013.