Rhode Island Republicans Demand Default

Jun 5, 2013

The Rhode Island Republican Party said the state should default on the roughly 100 million dollars it owes due to the failure of video game maker 38 Studios.  The GOP notes how the state isn’t legally required to pay back so-called moral obligation bonds.

State Republican Chairman Mark Smiley said the people who purchased the bonds bought an insurance policy as part of their investment. Smiley said the potential return on investment was higher because of the risky nature of the bonds. He also said taxpayers shouldn’t have to pay for a decision they didn’t make.

State leaders including Governor Lincoln Chafee and state Treasurer Gina Raimondo say defaulting on the 38 Studios’ bonds could hurt Rhode Island’s reputation. The Chafee administration is nonetheless looking at the cost of not paying back the bonds.

In related news, an investment expert will offer a presentation to a legislative committee Thursday on the pros and cons of defaulting on the 38 Studios’ bonds.

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