Depositors' Economic Protection Corporation (DEPCO) Bond Records

In 1991, the Rhode Island General Assembly created the Depositors Economic Protection Corporation (DEPCO) as a liquidating bank, and to assist in protecting the interests of individuals who held deposits 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 that had been established by the General Assembly in 1969 to insure deposits in certain of Rhode Island's financial institutions. The failure of several RISDIC-insured companies (Jefferson Loan and Investment Company and the Heritage Loan and Investment Company) over a short period of time overwhelmed RISDIC, quickly draining it of its limited financial resources. This prompted Governor Bruce Sundlun to declare a banking emergency and to close over forty RISDIC-insured institutions unable to obtain legally required deposit insurance elsewhere. 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 a myriad of other ways. Over time, many of the affected institutions were able to obtain 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 administer the failed institutions' assets and liabilities, serve as a liquidating bank, and to assist in protecting the interests of individuals who had held deposits with the uninsurable credit unions, loan and investment companies and bank and trust companies in the state (PL 1991, ch.116.) As such, certain accounting principles governing liquidating banks are applicable. 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. DEPCO was established a semi-autonomous public corporation. It was dissolved on April 30, 2003.