Statement: Governor Chafee Blasts Advocates of Default on 38 Studios Bonds

Press Release

Governor Chafee today defended the necessity of paying the 38 Studios debt as essential for Rhode Island to continue its recovery from the recession and recoup taxpayers' money through legal efforts.

Governor Chafee said, "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."

Governor Chafee added, "The push by Allan Fung and Ken Block to default is disheartening. We hear from them populist rhetoric that lacks any empirical research or credible support. Common sense dictates that you pay your debts however distasteful.

"From the beginning, I have been the most vocal and strongest opponent of the 38 Studios deal. In the summer of 2010, I was denied access to a Rhode Island Economic Development Corporation (now called Commerce RI) meeting where I hoped to speak and state the case on behalf of Rhode Islanders on why this was a bad investment."

Governor Chafee also pointed out that default may undo all our hard work to recover from 2008's major economic downturn. With the latest employment metrics showing an increase in the number of employed Rhode Island residents and the largest one month drop of unemployed in 30 years, Rhode Island's current approach to economic development is paying dividends. Through investments in education, infrastructure and workforce development, we are building our state's economy and reputation in the right manner and creating a solid foundation for years and decades to come.

"As we look to continue this positive momentum, candidates for Governor should be espousing positions that take into account our state's long-term future, not the instant gratification of appealing to primary voters."

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