Bain Slack's Concern over Paseo Caribe Repercussions

December 17, 2007


To Whom It May Concern:

As a senior vice president in the equity research department of Keefe, Bruyette and Woods, I have been following the bank sector in Puerto Rico since 2002 and researching the bank sector in general since 2000. Over this period of time, I have visited Puerto Rico frequently and have developed many significant relationships on the island. This includes not only those in the financial industry but also local investors, members of the press, business people, and government employees as well as others.

I have become increasingly concerned about many issues regarding the Puerto Rico economy. However, the recent events involving Paseo Caribe have heightened these concerns and have compelled me to communicate them to those who are in a position to understand the severity of the situation and have the capability to manage it to a quick and reasonable conclusion. I speak to institutional investors throughout the United States and Europe on a daily basis and my professional opinion is that this situation could become the poster child for investors to decide if the capital they manage should be involved in Puerto Rico now or in the future.

The repercussions of this situation are extremely serious. Investors need to be concerned that the Paseo Caribe case can and will be used as a precedent for all permits making them not even worth the paper they are printed on. In my opinion, this situation needs to be resolved as quickly as possible and the permits need to be validated as issued illustrating that Puerto Rico is willing to stand behind their agreements or risk scaring away investors globally. This situation is increasing the uncertainty in an already uncertain economy and is making a bad situation worse at a time when Puerto Rico can least afford it. The ramifications of undermining the permit process will not only negatively impact the bank investors I deal with but could also damage the sentiment of local investors, bank managements, developers, bond investors, as well as entrepreneurs that are needed in any economy to take risks and become future job creators.

I plead with you to show not only those in Puerto Rico but observers around the world who are watching that Puerto Rico honors its agreements and commitments. I ask this not only on behalf of investors but also on behalf of Puerto Rico, a wonderful island that I have developed a close relationship with over the past six years and hope to continue for many years to come. If there is anything I can do to help, please let me know.

Sincerely,

Bain D. Slack, Jr.