Shortly after noon on a blustery New Year's Day, with bells pealing and jets roaring overhead, Bruce G. Sundlun took the oath as Rhode Island's new Democratic governor. Three hours later, Rhode Island had plunged into a banking crisis. How did Sundlun respond? "We were decisive and took action," he says.
No kidding. By day's end, facing the failure of a private, state-created insurance fund, the newly minted governor had declared a bank holiday and shut down 45 state-chartered credit unions and investment companies. He spent the following week publicly soothing the institutions' 300,000 depositors while privately negotiating a bailout plan.
Five days later, the governor had jawboned nine commercial banks into lending the state $150 million to partly repay deposits in most accounts at the 16 institutions that have not qualified for federal deposit insurance. Other depositors will be paid in noninterest-bearing state scrip--a throwback to the 1930s--to be repaid over about five years.
Not a bad start, all things considered, for a 70-year-old who had never before held political office (table). But if the terrain was unfamiliar, the results were not: Sundlun, a lawyer and businessman, has made a career of getting what he wants done--and quickly.
Associates say that's because Sundlun is demanding. And tough. "In a different generation," says Leslie Y. Gutterman, rabbi at Sundlun's Temple Beth-El in Providence, "people would have called him a man's man." Right after Williams College, he joined the service and flew a World War II bomber. Shot down over occupied Belgium, he evaded capture for six months and fought with the Resistance. If not for the promotions he missed in that time, he says, he might have stayed in the military. Instead, he opted for Harvard Law School and then stints as a federal prosecutor and an assistant to the U. S. Attorney General.
MIXED BLESSINGS. Sundlun got into business in 1960 by joining the Outlet Co., a Providence holding company with a radio station and a department store. He handled acquisitions and by 1980 had built a conglomerate of 158 stores and 12 radio and TV properties. He sold Outlet, then rebought it with other investors in 1986. His take in the next three years: $13.8 million in salary and incentives, plus an additional $9 million on selling out in 1988.
That bankroll helped after the Democrats in 1985 persuaded him to run for governor. Sundlun spent $1.5 million toward the next year's election and $2 million in 1988 but lost both times to GOP incumbent Edward D. DiPrete. Last year, with Rhode Island in recession and DiPrete tainted by financial scandal, Sundlun's fiscal conservatism and no-nonsense style clicked. He won by 3 to 1.
The prize carries mixed blessings. New England's two-year-old slump has slammed Rhode Island, where unemployment has doubled, to 5.9%, since 1988. Tax revenues are sluggish, and the state faces a budget gap in the current fiscal year of $164 million--more than 10% of its budget.
Then there's the banking crisis. Sundlun knew weeks before he took office that the insurance fund, Rhode Island Share & Deposit Indemnity Corp., was in trouble. With his transition team, he negotiated with RISDIC officials and may have asked the insurer's board to vote on Dec. 31 for its dissolution. By inauguration day, says GOP state legislator David W. Dumas, "the decision had been made that the best thing to do would be to get all the blood on the floor at once."
So far, Sundlun has been buoyed by his decisiveness. "As the new kid on the block, he can just blame it on the past administration," observes Darrell M. West, a Brown University political scientist. Indeed, the state's attorney general, a Democrat, is looking into charges of "cronyism" between a troubled credit union and some in DiPrete's administration. DiPrete, who did not respond to inquiries, has denied such charges and called Sundlun's actions political. Just the same, the state now is on the hook for $150 million--and perhaps far more--that it will owe depositors even after it sells off assets of the failed institutions. And on Jan. 8, Standard & Poor's Corp. put the state's general obligation bonds, still rated AA, on its CreditWatch, for a possible downgrade pending Sundlun's next few moves.
Associates such as Gary C. Schuler, president of Rhode Island manufacturer Stanley-Bostitch Inc., say Sundlun revels in crisis. "He's like a bull who takes his china shop with him," Schuler says. If so, the governor is in his element now.
RESUME: BRUCE G. SUNDLUN BORN:
Jan. 19, 1920, Providence
Democratic Governor of Rhode Island
Williams College, BA, 1942
Harvard Law School, 1949
ROAD TO THE STATEHOUSE:
Bomber pilot, 1942-45
Assistant U.S. Attorney, 1949-51
Special assistant to U.S. Attorney
Presidential appointee to board of
Communications Satellite Corp., 1963
Chairman, CEO, Outlet Corp., 1984
Flies small planes; married four times