Talk about hitting the ground running. Just three hours after taking office on Jan. 1, Rhode Island Governor Bruce Sundlun shut down 45 state-chartered banks and credit unions backed by a debilitated private insurance fund. The fund, one of a dwindling number left in the U. S., requested a state takeover after a member bank's embezzlement-related collapse.
The affected institutions, with about $1.7 billion in assets and 300,000 depositors, won't reopen until they obtain federal insurance, for which all but two have applied. But it's unclear how many of the institutions can pass federal solvency tests. The shutdown in Rhode Island is an unnerving reminder of 1985, when private insurers in Ohio and Maryland collapsed, wiping out the savings of thousands of depositors.