Depositors Vow To Continue Fighting Banking Bailout
PROVIDENCE, R.I. (AP) _ Angry depositors are fighting a bill that would make them wait three years for money from closed banks and credit unions, but the measure has already been passed by the Rhode Island House.
Jack Kayrouz, who heads a depositors group, said the bill passed by the House on Thursday would not return money quickly enough to thousands of depositors whose money has been frozen for more than a month in 14 closed institutions.
The measure was up for Senate consideration today and Kayrouz said he would be on hand.
″We are going to rock that Statehouse,″ he said. ″If they vote on it again, we are going to continue our voices. ... That’s an outright rape of our economy and our elderly.″
Under the bill, depositors with $100,000 or less in the closed institutions will eventually get all their money, but amounts above that would be refunded at less than 100 percent.
Gov. Bruce G. Sundlun closed 45 banks and credit unions Jan. 1, his first day in office, after the collapse of the institutions’ private insurer, the Rhode Island Share and Deposit Indemnity Corp. All have reopened except 14 that were rejected for federal deposit insurance. Their deposits total $1.3 billion.
After almost five hours of debate Thursday, the House passed the bailout bill by a 60-30 vote, with only minor amendments that did not change the substance of a compromise between legislators and Sundlun.
That was a narrower margin than is typical in the 100-member chamber dominated by 89 Democrats.
Minority Leader David Dumas said he voted against the bill because legislators couldn’t make a ″moral case″ for the sliding scale for return of deposits of more than $100,000.
Deposits of $200,000 to $300,000 would be refunded 90 cents on the dollar; $500,000 or more would be refunded at 50 cents on the dollar. About 950 depositors have accounts of more than $100,000 in the affected institutions.
A new state agency called the Depositors Economic Protection Corp. would be formed to liquidate the state’s closed credit unions and banks and pay back depositors. DEPCO would be funded by a revenue bond of up to $150 million and possible borrowing.
To pay for the bond, the state would forgo a cut in the state sales tax, which was to have dropped to 6.5 percent from 7 percent in July.