NEW: Block Urges Voters to Watch How Legislators Vote on 38 Studios
GoLocalProv Politics Team
NEW: Block Urges Voters to Watch How Legislators Vote on 38 Studios
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“The state is in the middle of a lawsuit against fourteen different parties involving the 38 Studios scandal and for some reason, we are in a rush to pay off these bonds,” said Block. “The only people pushing for repayment are the three largest bond rating agencies which are compromised on this issue—they gave good ratings to the 38 Studios bonds knowing full well the state might decide to reject paying them off. The rating agencies have a vested interest in forcing the state to pay off the bonds and take them off the hook for their failure to properly inform investors. “
The House is expected to vote on a state budget this week that currently includes $12. 5 million in 38 Studios bond repayments.
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“I understand that many Senators and Representatives feel they were misled by the General Assembly leadership when they approved the original 38 Studios loan program,” said Block. “But when it comes to deciding whether or not to repay the bonds this year, there is no excuse for taking the wrong position. Legislators will not be able to tell their constituents that they were misled. This is a clear choice: stand with leadership and Wall Street or stand with the people of Rhode Island.”
Block has called on the U.S. Attorney’s office to conduct an investigation into the 38 Studios deal.
“We need a transparent and above board investigation of this deal, conducted by federal authorities," Block said.
Who Wants to Pay and Who Wants to Default on the 38 Studios' Bonds
CON
Allan Fung
Republican candidate for Governor
“I am repeating my opposition to the 38 Studios loan guaranty and to the use of taxpayer dollars to repay those moral obligation bonds.”
CON
Ken Block
Republican candidate for Governor
“38 Studios was a bad deal and a bad investment from the very beginning and now Rhode Island taxpayers are being asked to take the hit for bondholders who should have known better...As long as there are serious legal questions still to be decided, we need to stop the repayment process."
PRO
RIPEC
John Simmons, executive director of the Rhode Island Public Expenditure Council
“We’re not going to punish anybody but ourselves if we don’t pay."
PRO
Greater Providence Chamber of Commerce
Laurie White, President of Chamber of Commerce
“I think it’s important that action occur quickly. Our view is that economic development in Rhode Island has to be the main event. … We need a very dramatic, aggressive effort to change the path that we’re on.”
PRO
Gina Raimondo
Democratic candidate for Governor
“Despite my frustration with everything surrounding this transaction, I believe it is in the best long-term interest of the state and all taxpayers to repay these bonds."
PRO
Clay Pell
Democratic candidate for Governor
“Clay does not believe Rhode Island should default on its moral obligation bonds when they come due. 38 Studios was a terrible mistake — and another example of why we need to change the culture of politics in Rhode Island"-Devin Driscol.
PRO
Angel Taveras
Democratic candidate for Governor
“While I share the frustration of many Rhode Islanders, I believe that not paying back 38 Studios bondholders would have a detrimental impact on the state’s bond rating that would far outweigh any short-term benefit we might gain. We cannot afford to default on our obligations.”
PRO
Lincoln Chafee
Governor of Rhode Island
“The candidates who can’t understand these two obvious truths are unfit to be Governor. The consequences of default would place Rhode Island as one of the lowest state bond ratings in the nation, and the industry would reduce Rhode Island to ‘junk bond’ status. We have been told in no uncertain terms that the reaction to not paying our debt obligations will be severe and have an adverse impact on Rhode Island. In addition, failure to honor our obligations could have harmful effects on the pending lawsuit.”
CON
Mike Stenhouse, CEO of RI Center for Freedom and Prosperity
"It's not just about not paying off bondholders. Bondholders are adults, they knew the risk. It's not just a question of the credit agencies. It's a question of what would payment crowd out, what reforms could we achieve with that money, such as sales tax reform, which would enable us to create jobs."
CON
Mike Riley
2012 Republican candidate for the 2nd Congressional District of Rhode Island.
"If we had a real Governor, he would stand up for the Taxpayers and the State of Rhode Island and stand up against threats by rating agencies."
PRO
Professor Ed Mazze
Professor of business at University of Rhode Island
"Even though this is a moral obligation in terms of the way the financial deal is set up I still feel the state has an obligation to the bondholders, to make good on their payments."
