STEVE INSKEEP, HOST:
People in Puerto Rico have learned to live with an economic crisis. The government there says it can't pay its bills. Unemployment is high. Banks are trying to keep their customers from panicking. So how do you do that? You know, you say, don't panic. It gets people thinking about panic. Robert Smith of NPR's Planet Money podcast reports from Puerto Rico.
ROBERT SMITH, BYLINE: Nobody wants to leave their money with a nervous banker. And so in Puerto Rico these days, if you are responsible for millions of dollars of deposits, you try to project some confidence. For instance, in the tiny town of Corozal, the head of the credit union is the only one on the plaza wearing a tie. Eddie Alecea strolls with the sidewalks, waves at all his customers, the people who work in the rosary story, the bus driver.
EDDIE ALECEA: The driver's a member of our institution, too.
SMITH: It's all good, even though there are plenty of reasons to worry.
Around the square there are empty storefronts
ALECEA: Yes. It's a lot of places empty. That was Payless.
SMITH: Payless shoe store.
ALECEA: Yes, Payless shoe store. The next is Banco Santander, also closed last year.
SMITH: And then there is the scariest thing of all. Eddie's credit union lent a lot of money to the Puerto Rican government - bought bonds. All the banks and all the credit unions did. And last year, the government said, yeah, we're not going to be able to pay all that money back. All across the island, people started to ask, wait a minute. If I put my money in the credit union and they put it in government bonds, is the money still there? One retiree, Salma Carthegna, remembers sitting with her friends for lunch when they heard the news.
SALMA CARTHEGNA: My friends said that if I have money in a cooperativa...
SMITH: A credit union.
CARTHEGNA: I should take my money out because my money was not safe anymore.
SMITH: Big banks in Puerto Rico are backed by U.S. government insurance, the FDIC. But the cooperativas, which serve about a third of the island, are not covered by the FDIC. They have a local form of insurance. So Salma rushed down to her credit union and found a line of people all wondering if their money was safe.
CARTHEGNA: They were worried. I was worried.
SMITH: This is the crucial moment for any banking institution. The country was on the verge of a panic. And the classic way to handle this is just to project calm. In Corozal, Eddie Alecea put out an order. If anyone wanted to take their money out, they had to come look him in the eye. Eddie says he'd sit down with them, open the big accounting book and show them everything.
ALECEA: If I told you that we are growing, you are going to understand that this institution is going to continue doing business for the next years.
SMITH: And just in case, behind the scenes Puerto Rico's credit unions were starting to work together. They were calling each other, offering to share cash in case one branch had too many withdrawals. Aurelio Gonzales runs a credit union outside of San Juan, and he said if he needed it, he could have had armored trucks deliver more money within an hour. But what he really worried about was some other branch starting a bank run.
AURELIO GONZALES: I do my best here, but I can't control the other credit unions.
SMITH: Because all it takes is for one credit union to lock the doors and put up a sign that says, we'll be back tomorrow.
GONZALES: Yes. That's the problem.
SMITH: Only a few of his customers pulled out in the end. But it could start all over again if the government of Puerto Rico defaults on more bonds. Back in Corozal, Eddie Alecea is not taking any chances. After we walk around the plaza, he shows me a construction project, their new headquarters for the credit union.
Is part of this to build confidence?
ALECEA: It's part of our expression of how solid is our institution.
SMITH: In the world of banking, looking solid is most of the fight. Robert Smith, NPR News.
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