Less than a week into the massive blackout that followed Hurricane Maria and essentially turned Puerto Rico into a cash-only economy, one top local banker became so concerned about the supply of bills that he called the Federal Reserve.
William Dudley, the New York Fed president, put the word out within minutes, and ultimately a jet loaded with an undisclosed amount of cash landed on the stricken island, according to Richard Carrion, the Popular Inc. executive chairman who made the call. He and Chief Executive Officer Ignacio Alvarez reflected on the chaotic early days of the crisis in an interview Friday at their office in San Juan’s Hato Rey financial district.
“We thought the cash was going to be a problem,” said Carrion, 64, whose bank is the biggest in Puerto Rico by deposits. “The magnitude of this is something we haven’t experienced.” Suzanne Elio, a New York Fed spokeswoman, declined to comment on the money shipment.
The executives described corporate clients’ urgent requests for hundreds of thousands in cash to meet payrolls, and the challenge of finding enough armored cars to satisfy endless demand at ATMs. Such were the days after Maria devastated the U.S. territory last month, killing 39 people, crushing buildings and wiping out the island’s energy grid. As early as the day after the storm, the Fed began working to get money onto the island, according to a person with knowledge of the matter, who asked not to be named discussing the Fed’s preparations.
The two executives sipped strong coffee in Popular’s air-conditioned, third-floor offices, an oasis from the crisis still unfolding in many parts of the island. On the ground floor, a small crowd took advantage of available electricity to charge phones and cool off. On a recent day, a few people had brought in chairs and set up a television and video games to pass the time.
Nine of ten Puerto Ricans are still without power, half the island has no drinking water, schools are closed, there’s a government-mandated curfew—and businesses everywhere are trying to cope. At Popular, half of branches remained shuttered Friday, as did two-thirds of ATMs.
The devastation “is unbelievable,” said Carrion, who has been living out of a hotel since his Old San Juan residence lost power.
Alvarez, 58, is a Harvard Law School graduate who took over as Popular’s CEO earlier this year. Previously, the post was held by Carrion, whose family has helped run the firm for generations. Alvarez said that stores have closed and workers have been laid off as a result of the storm, which is a worry for the bank.
“More than property damage to our collateral, which is not going to be that great, is the economic disruption caused by the hurricane,” he said.
The lack of power was a nightmare for dialysis and cancer patients, as well as the elderly trapped in condominiums without air conditioning. The blackout also means that this corner of credit-card dependent America is relearning how to function almost entirely in cash. When some generator-powered ATMs finally opened, lines stretched hours long, with people camping out in beach chairs and holding umbrellas against the sun.
Puerto Rico’s government has said that “conservatively” some 100,000 structures were leveled. Alvarez said he thought those were primarily lower-income wooden buildings that are rarely financed with traditional mortgages. Carrion said he was optimistic about the prospects for a “little boom of construction” fueled by insurance and aid money.
Popular could face a downgrade by Fitch Ratings on concerns that the storm’s after-effects may harm business. Its stock has dropped 11 percent since the storm in New York trading, and is down 19 percent for the year.
A major concern, both men agreed, was the prospect of a mass exodus to the U.S. mainland. Governor Ricardo Rossello has warned that, if the aid package being debated in Washington falls short, “millions” could leave the island. The population has already been shrinking 2 percent annually for three years running on the island of 3.4 million, due in large part to a decade-long economic lull.
“There is a danger” of flight, Carrion said. “I don’t need a visa. I don’t need anything to go there. I have relatives in Orlando, or I have relatives in Houston, or I have relatives in New Jersey.”
“Everybody has relatives in the states,” said Alvarez, cutting him off.
“Yeah, everybody,” Carrion said. “There’s more Puerto Ricans in the continental U.S. than here. So everybody’s got a relative.”
This article was originally published in Bloomberg.