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Rhode Island Depositors' Economic Protection Corporation (RISDIC) Financial Institutions' Corporate records

 Series — Box: 1-22. Rhode Island Depositors' Economic Protection Corporation (RISDIC) Financial Institutions' Corporate records
Identifier: 1636-1453

Scope and Contents

The records in this series include the documentary assets of several RISDIC-insured failed financial institutions transferred to the custody of the Depositors Economic Protection Corporation. Included are articles of incorporation, Board of Director minutes, annual meeting booklets, committee meeting records, financial records, statements of financial conditions; company bylaws; credit committee meetings, and audit records. Records from the following institutions are included: Banner Loan and Investemnt Bank; Brown University Employees Credit Union; Chariho-Exeter Credit Union; Central Credit Union; Columbian Credit Union; Davisville Credit Union; East Providence Credit Union; Greater Providence Deposit and Trust Company; Heritage Loan and Investment Bank; Jefferson Loan and Investment Bank; Knightsville Loan and Investment Bank; Marquette Credit Union; Providence Teachers' Credit Union, and the Rhode Island Central Credit Union.

Dates

  • 1936-1992
  • Majority of material found within 1970-1989

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' Insurance 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 a number of RISDIC-insured companies over a short period of time overwhelmed RISDIC's limited financial resources. This prompted Governor Bruce Sundlun to declare a banking emergency and to close over forty institutions unable to obtain the required insurance. 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).

As Receiver and liquidator for RISDIC, DEPCO inherited RISDIC's corporate records. This Sub-Group consists of those records.

RISDIC's initial purpose was to provide insurance for credit unions chartered in Rhode Island. At first, the membership was limited mostly to small institutions, with total deposits in 1972 of $134 million distributed over 40 institutions. Both the number of institutions and the total deposits in these institutions gradually increased, partly as a result of legislation enacted in 1976 that allowed RISDIC to insure financial institutions other than credit unions, and a 1977 law requiring insurance for all depository institutions. By 1980 RISDIC insured $761 million in deposits, slightly more than a 300 percent increase in real dollars from 1972, at 78 institutions. RISDIC’s responsibilities grew with its membership.

In 1980, legislation permitted the Rhode Island Department of Business Regulation (DBR) to accept examinations performed by RISDIC. Limited hiring by DBR in the late 1980s as a result of austere state budgets compelled DBR to rely increasingly on RISDIC personnel to conduct depository examinations. Placing the management of the process for examining the financial condition of the institutions with RISDIC, the same organization that insured them, however, decreased the objectivity and effectiveness of the supervisory process.

In addition, insurance coverage was increased by RISDIC over time, rising from the initial maximum coverage of $40,000 per account to $100,000, consistent with the increase in federal limits. The ceiling was raised further in 1985, when RISDIC adopted rules to provide insurance up to $500,000 and to provide unlimited coverage on specific accounts. The desire to extend insurance coverage to larger accounts and to a more diverse group of institutions was, in part, an attempt to compensate for a shift to federal insurance coverage by the stronger RISDIC- insured institutions. The exodus to federal insurance was accelerated by the failure of private insurance funds in Ohio and Maryland in early 1985. While the Rhode Island legislature did not enact a 1986 bill filed by the governor that would have required federal insurance for all RISDIC institutions, nine of the twenty-two largest RISDIC-insured institutions nonetheless became federally insured, leaving behind mostly small or weak institutions. Two-thirds of the remaining large RISDIC-insured institutions ultimately were unable to obtain federal insurance.

A convergence of factors led to the undoing of RISDIC. The defections of some of the strongest companies from RISDIC to the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Association (NCUA) along with failures of a number of those institutions still insured by RISDIC weakened it. Withdrawals by panicked major depositors drained remaining RISDIC-insured financial institutions of their funds. This eventually hit RISDIC, which did not have the financial resources to compensate for the losses, to respond to the crisis, and make good on remaining depositors’ losses.

Source: Thomas Pulkkinen and Eric Rosengren, "Lessons from the Rhode Island Banking Crisis," in: New England Economic Review, May/June 1993:3-12.

Extent

26.40 Cubic Feet (22 record cartons)

Overview

RISDIC's files included corporate records from the various financial institutions it insured. DEPCO inherited the assets and liabilites, including the records, of the failed RISDIC-insured financial institutions.

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