Cranston, Rhode Island Mayor Allan Fung has challenged Governor Chafee to answer "three important questions" related to his stance that the state must avoid defaulting on the bonds that financed 38 Studios. Fung, who is a Republican candidate for Governor, is skeptical that defaulting on future debt payments will damage the state's reputation and ability to secure credit for future endeavors. He put the following questions to Chafee:
• Will the governor “commit to transparency” and wait until there has been a “thorough investigation” before spending “millions of taxpayers’ dollars to repay investors?”
• Will the administration seek input from more than just the one consultant that has said the state should pay?
• And will the governor challenge the “threat of overreaction by credit rating agencies” that have said the state’s general obligation bonds will be reduced to junk status if the state defaults?
“I will not sit back and accept that the taxpayers of Rhode Island must hand over millions of dollars to the Wall Street insiders without a fight,” Fung added.
Speaking on Thursday (but not in response to Fung's questions) Chafee said that his top priority is “to get the money back.” He said this is why the state sued Curt Schilling and key players for the state who crafted the $75-million loan deal.
“There’s only one opportunity that I know of to recoup the money, and that’s where our efforts have been focused,” he said.
Chafee has said he opposes defaulting because it will hurt the state’s credit rating and create more problems than it solves, a stance backed up by a consultant’s report last week.
Source: Providence Journal