(Bloomberg) -- U.S. Treasury Secretary Jacob J. Lew said afailure by Congress to help Puerto Rico resolve its debts may hitthe retirement portfolios of average Americans, as he stepped uphis call for lawmakers to help the island.

Lew endorsed legislation granting the commonwealth access to anorderly bankruptcy regime that’s needed to prevent a chaotic andprotracted resolution of Puerto Rico’s financial troubles, an eventhe said would be costly both for the island and the U.S.

“The continued deterioration of Puerto Rico’s economic andfinancial conditions has the potential to further harm retireeinvestment portfolios across the country,” Lew said in a letter toRepublican Senator Orrin Hatch released Tuesday. “A significantportion of Puerto Rico’s debt is still held directly by individualretail investors or indirectly through the municipal bond fundsthey own.”

Junk-rated Puerto Rico and its agencies have racked up more debtthan any state except California and New York as the government borrowed topaper over budget deficits.

Read: Best practices of the best-funded pensionplans

Last month, Governor Alejandro Garcia Padilla said thecommonwealth couldn’t pay all of its obligations. Hisadministration will draft a debt-restructuring plan by Sept. 1.

Lew’s statement comes as Congress prepares to take off forsummer recess and as the chances of default are rising. On Aug. 1,$36.3 million of bonds sold by Puerto Rico’s Public Finance Corp.become due. The island’s legislature hasn’t appropriated the fundsto settle that payment.

Bills to allow some commonwealth agencies to file for Chapter 9bankruptcy, introduced in both chambers, haven’t advanced so fardue to lack of support from Republican leaders.

Lew also reiterated that Puerto Rico needs “a long-termcomprehensive fiscal plan” that should include input from a rangeof stakeholders and “have credible assumptions for long- runrevenue collections, expense outlays, and growth.”

About 52 percent of U.S. mutual funds that focus on municipaldebt hold Puerto Rico securities, according to Morningstar Inc.

--With assistance from Michelle Kaske in New York.

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.