Panel debates consequences of 38 Studios default
Two groups that come from different ends of the political spectrum put together a panel Thursday to discuss the options Rhode Island might have when it comes to paying back the bonds for 38 Studios.
The state was left on the hook for about $100 million when Curt Schilling's video game company went bankrupt.
Occupy Providence is known as far left, maybe even anarchist. The Stephen Hopkins Center fancies itself as a think tank on the more conservative side of things.
They put together a panel of professors, policy analysts and investors, and what they agreed upon was that the state should learn what the consequences of not paying back 38 Studios bonds would be.
The administration is convinced the bonds need to be paid. Besides the state's reputation, the administration says the costs of not paying will go far beyond the $100 million cost of paying the bonds off.
"We know that the consequences will be severe, and we believe and we can demonstrate that those consequences could approach $100 million or actually exceed it, and that's not counting the impact that it would be to our municipalities, which will undoubtedly be affected," Administration Director Richard Licht said.
The investor on the panel, Bob Cusack, deals with municipal bonds.
"I don't think there'll be a big hit to municipalities. We have the Fiscal Stability Act, passed a couple of years ago, which really protects bondholders in our municipalities in Rhode Island. So, I don't think that's a problem. If we borrowed a $150 million a year, the difference in borrowing costs could be about a $100,000 if the rating were to go all the way from AA to A, which is unlikely," Cusack said.
Lawmakers have a couple of weeks left in the session to decide whether to pay back the bonds or default.