Senate Republicans, Independent Oppose Repayment of 38 Studios Bonds

STATE HOUSE – The Senate Republican caucus, joined by Independent Senator Edward J. O’Neill, announced Tuesday it is unanimously opposed to appropriating state money to repay the 38 Studios bond. 

“The bond clearly states that Rhode Island is not responsible for this debt,” said Senate Minority Leader Dennis L. Algiere, (R-Dist. 38, Westerly, Charlestown, South Kingstown).  “This was a high-risk transaction, of which the investors clearly had knowledge.”

The state paid a premium to its insurer because the loan to Curt Schilling’s now-defunct video game company was considered “high risk.”  The Republicans and O’Neill, (I-Dist. 17, Lincoln, N. Providence, N. Smithfield), contend the state’s insurer should be responsible for repaying the loan instead of placing the burden on taxpayers.

“From an examination of past history of moral obligation bonds, it seems the future borrowing interest rate won’t be affected enough to justify repaying the loan,” said Senate Minority Whip David E. Bates, (R-Dist. 32, Barrington, Bristol, East Providence).

Senator Dawson T. Hodgson, (R-Dist. 35, East Greenwich, North Kingstown, Narragansett, South Kingstown), said that the cost of defaulting on the loan should have been investigated much sooner.

“We have a fiduciary obligation to our citizens to oppose gratuitous transfers of public wealth to private hands,” Hodgson said.

“The reason for the more than 7 percent interest rate was due to the risk and investors knowingly took that risk,” said Senator O’Neill.