Puerto Rico's Cooperative Credit Unions' Financial Outlook Is Dire

Addressing a federal oversight board overseeing Puerto Rico’s financial restructuring, Governor Alejandro Garcia Padilla stated that Puerto Rico’s cooperative credit unions face huge financial losses and could collapse.

The island's 116 Coops have suffered large losses in their investment portfolios from the default on Government Development Bank and General Obligation bonds and could suffer larger losses under a broader debt restructuring plan.

The Governor warned that a broader debt restructuring could: cause one-third of all Puerto Ricans to suffer losses on their deposits; reduce lending and economic growth on the island; and cause the collapse of the island's state-insured credit unions as depositors flee to FDIC-insured institutions.

The Governor noted that the cost of protecting credit union depositors, as well as the cooperative credit union system, was estimated at $1.2 billion.

Note: These 116 cooperative credit unions are not insured by the National Credit Union Share Insurance Fund.

Below is the slide from the Governor's presentation.