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Rhode Island Depositors Hitting the Streets, Statehouse to Agitate

September 1, 1991

PROVIDENCE, R.I. (AP) _ After eight months without most or all of their money, angry depositors at Rhode Island’s closed financial institutions are returning to the streets and the Statehouse for another round of protests.

Seven of them were arrested for disorderly conduct when about 250 demonstrators erupted from a meeting and blocked an entrance ramp to Interstate 95 in Warwick last Monday night.

Donald Wolstenholme, 67, said he and his wife, Raymonde, 68, regret their arrest. But for 47 years they saved, only to have $25,000 frozen in Woonsocket’s Marquette Credit Union.

″We were thinking about, you know, traveling, going on vacation - in other words, enjoying our retirement,″ Wolstenholme said, adding that they were pinched but surviving on other sources of money.

″It wasn’t a million ... but we should be able to enjoy the money we saved.″

On Wednesday, 200 people marched from the Statehouse to the offices of the state agency, DEPCO, that was created to refund their money. They were met by locked doors but chased one DEPCO official down the street when he tried to leave.

Protest leaders set a Saturday deadline for DEPCO, which is chaired by Gov. Bruce G. Sundlun, to begin moving toward a quick refund of all their money or face more demonstrations.

″We’ve had enough suffering. The governor still doesn’t believe people are suffering,″ said Jack Kayrouz, founder of Citizens for Depositors’ Rights.

The elderly, often with the largest accounts and relying on the interest income, are the ones suffering, he said.

More than $1 billion in about 288,000 accounts remains locked in a dozen banks and credit unions that Sundlun closed Jan. 1 when their private deposit insurer failed.

Out of 45 that Sundlun originally closed, the rest have repaid depositors by raising their own money, merging with federally insured institutions or obtaining federal insurance on their own.

″Nobody that I know of in the General Assembly ever thought it would go beyond July,″ said state Rep. Francis Gaschen, a member of a special commission investigating the crisis.

″People are hoping for miracles,″ he said. ″But this isn’t about miracles. It’s about money, and miracles don’t seem to have a place here.″

Depositors’ groups demand that the state sell bonds to cover the full amount of refunds. They want it done within the next few weeks. They also chafe at what they say is DEPCO’s slowness to finance pending deals to merge some closed institutions with others that have federal insurance.

The issues haven’t changed much from when hundreds of shouting depositors jammed the Statehouse rotunda during the first weeks of the crisis while the General Assembly debated creating the Depositors Economic Protection Corp.

Kayrouz and his supporters still don’t like DEPCO, which would make repayments over as long as four years and would not fully repay anyone with more than $100,000 on deposit. The private insurer, the Rhode Island Share and Deposit Indemnity Corp., had covered up to $500,000.

That makes it especially difficult for those who thought their money was even safer than under federal insurance, said Lawrence Grebstein, a clinical psychology professor at the University of Rhode Island.

″This is something they didn’t expect,″ he said. ″This is money that’s very important to them, the very thing they were trying to avoid happening.″

With barely more than a murmur, depositors endured three weeks of televised hearings this summer into how insiders withdrew hundreds of thousands of dollars before the collapse.

But the anger ignited when they learned that Richard Gaskill, DEPCO’s new executive director, planned a $2,000 get-acquainted party for its employees and those of two credit unions it expects to absorb soon.

Sundlun canceled the party, but the freshman governor remains convinced the demonstrators represent a minority.

Depositors at some closed institutions have received payouts of up to $13,500 per individual, financed in some cases partly by DEPCO, which has sold $150 million in bonds financed by sales taxes.

But many of the angry depositors are from Rhode Island Central, the state’s second-largest credit union with $276 million in assets when it closed, and they have received no money.

After a series of legal battles, DEPCO is moving to take over Rhode Island Central as its first liquidation project. Sundlun predicts the anger will quell once everyone has some cash back in their hands.

He says that should be by the end of this year, but he won’t say how much could be involved ″because then you’ll nail me to it.″

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