Puerto Rico’s cooperativa system—consisting of state-insuredcredit unions—faces huge financial losses and could collapse,costing low-income residents their life savings, the territory’sGovernor, Alejandro Garcia Padilla told the federal oversight boardoverseeing Puerto Rico’s financial restructuring.

In an Oct. 14 presentation to the oversight board, Padilla saidthat the cooperativas hold deposits for one-third of all islandresidents and have investment portfolios that are about 75%invested in commonwealth bonds.

Puerto Rico faces a huge fiscal crisis and the island governmenthas been unable to pay its debts. Earlier this year, Congresspassed legislation creating the oversight board, which is chargedwith restructuring the government and its debt. Therestructuring must protect the cooperativa system, Padillasaid.