Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, April 10, 1991 TAG: 9104100167
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Gov. Bruce Sundlun, a Democrat, shut down 35 credit unions and 10 banks on New Year's Day after the private Rhode Island Share and Deposit Indemnity Corp. collapsed.
Thirty of the institutions have since reopened with federal insurance, but 15 others remain closed and their depositors' accounts frozen.
"People have lost money set aside for weddings, had burial accounts frozen, lost homes and businesses," Sundlun told the Senate Banking Committee.
"Every day, heartbreaking appeals come to my office. . . . Terminal cancer patients whose last days are burdened by worry, frantic parents seeking funds to fly to critically injured children across the country, desperate victims of home and business foreclosure. From my office, it is not a pretty sight," he said.
More than half the state's one million people have been affected, Sundlun said.
"Not even in the Great Depression has any state been so impacted by the failure of a financial institution," he said.
Sundlun is backing legislation, sponsored by Sen. John Chafee, R-R.I. It would make a $500 million pool of federal money available for low-interest loans to states whose private deposit insurance systems collapse. No more than $150 million could be lent to any one state and repayment would be required in 10 years.
Chafee acknowledged that the plan was - in the words of Sen. Christopher Bond, R-Mo. - "a little bit of a bailout."
He said that although the legislation would help Rhode Island, it would not be special-interest legislation because "it could prove valuable to . . . 20 states in which non-federally insured [credit unions are] allowed to operate."
by CNB