House Panel Examining Risk of Puerto Rican Default

Rep. Sean Duffy (R-Wis.), chairman of the House Financial Services Committee’s oversight subcommittee, recently wrote to the FDIC requesting information about how banks might handle a debt default by Puerto Rico. Earlier this month, the island commonwealth defaulted on a $58 million bond payment, and in June, Puerto Rico’s governor warned that it might default on $72 billion in debt.

Duffy asked the FDIC to describe how well Puerto Rican banks are capitalized and how much of the debt they hold is at risk of default, to identify other U.S. banks that would be put at risk by a larger default and to explain how it is preparing to handle possible failures of Puerto Rican banks. He also asked for details of communications between the FDIC and Puerto Rico’s banking commissioner.