Lessons from the Collapse of Three State-Chartered Private Deposit Insurance Funds
The January 1991 collapse of the Rhode Island Share and Deposit Indemnity Corporation (RISDIC) was the last in a series of post-1970 failures of state-chartered, privately operated deposit insurance funds for thrift institutions, industrial banks, and some credit unions. The failures began in Mississippi in 1976 and continued in Nebraska and California (1983), Ohio and Maryland (1985), Utah and Colorado (1987), and Rhode Island (1991). By February 1989, even the Federal Savings and Loan Insurance Corporation’s (FSLIC) authority to accept new conservatorships or receiverships was effectively suspended. The Resolution Trust Corporation was created the following August to administer the resolution of insolvent thrifts whose deposits were FSLIC insured, and the FSLIC was abolished (Kane [ 1992]; U.S. House of Representatives ).
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