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Rhode Island Depositors' Economic Protection Corporation (DEPCO) legal case records

 Series — Box: 1-7. Rhode Island Depositors' Economic Protection Corporation (DEPCO) legal case records, 1991-1998
Identifier: 1636-1737

Scope and Contents

In order to recoup some of RISDIC's financial losses and to compensate depositors, DEPCO became involved in numerous legal cases, either as a complainant or as a defendant. Some of these cases involved the pursuit of parties who had outstanding loans with the failed institutions, others related to the legal and audit representations of the financial conditions of the failed institutions. Among the most prominent cases were DEPCO vs. Ernst and Young, DEPCO vs.Joseph Mollicone, DEPCO vs. Mapleroot, and DEPCO vs. Adler, Pollock, and Sheehan. In February, 1992, for example, DEPCO filed a complaint against Ernst and Young in Rhode Island Superior Court, charging them with negligence, negligent misrepresentation, and breach of contract ("DEPCO state action"). The DEPCO complaint sought damages which allegedly resulted from the failure of E&Y to properly audit and report the financial condition of the failed institutions. Court actions involving DEPCO continued for many years after it was dissolved in 2003.

Dates

  • 1991-1998

Creator

Language of Materials

English

Conditions Governing Access

No special restrictions unless otherwise specified.

Conditions Governing Use

Copyright is in the public domain unless otherwise specified. We reserve the right to restrict reproduction of materials due to preservation concerns.

Biographical / Historical

In 1991, the Rhode Island General Assembly created the Depositors Economic Protection Corporation (DEPCO) to assist in protecting the interests of depositors of certain credit unions, loan and investment companies and bank and trust companies in the state (PL 1991, ch.116.) This was made necessary by a banking crisis triggered by the collapse of the Rhode Island Share and Depositors' Indemnity Corporation (RISDIC), a private firm established by the General Assembly in 1969 to insure deposits in certain of Rhode Island's financial institutions. The failure of multiple state credit unions and other financial institutions over a short period of time had overwhelmed RISDIC's limited resources. This prompted Governor Bruce Sundlun to declare a banking emergency and to close over forty institutions unable to obtain legally required insurance to back their deposits. This was the last in a series of post-1970 failures of state-chartered, privately operated deposit insurance funds for thrift institutions, industrial banks, and some credit unions. The failures began in Mississippi in 1976 and continued in Nebraska and California (1983), Ohio and Maryland (1985), Utah and Colorado (1987), and Rhode Island (1991).

The lockout provoked a financial crisis. It prevented depositors from withdrawing their funds and caused consternation in myriad other ways. Over time, many of the affected institutions were able to obtain deposit insurance from other sources, such as the Federal Deposit Insurance Corporation, and resumed operations. Others were absorbed by insured entities. In the end ten financial institutions were unable to reopen. These financial institutions' lending practices accounted for their eventual insolvency. They were all placed into conservatorship.

DEPCO was created to effectively assume the role of a liquidating bank for the closed, uninsurable institutions. As such, certain accounting principles governing liquidating banks were applicable to DEPCO. DEPCO was empowered to act as the receiver, to manage the failed banks' estates, marshal and liquidate their assets, repay depositors, and seek recovery from those responsible for the fiasco. It was established as a semi-autonomous public corporation. It was dissolved on April 30, 2003.

Extent

8.4 Cubic Feet (7 record cartons)

Abstract

This series includes, but may not be limited to, records related to legal cases brought by or against DEPCO in the mid-1990s. The records include case exhibits, depositions as well as videotapes of depositions,receivership financials and balance sheets; receivership interim operating procedures, and first interim reports, court appointment of receivers, as well as documentation of public hearings.

Accruals

No accruals are anticipated at this time.

Language of description
Undetermined
Script of description
Code for undetermined script

Repository Details

Part of the Rhode Island State Archives Repository

Contact:
33 Broad Street
Providence RI 02903 USA
401-222-2353