This was the year the insiders were caught at their own game ...
The year the banking crisis pulled the cover off a political system that routinely, often unconsciously, indulged special interests - regardless of the ultimate cost.
But there's more to be learned here than simply that the General Assembly passed - and a string of governors signed - a pile of bad banking bills. If that was the only problem, it would be relatively easy to fix.
After all, the bankers and the credit union executives surely argued at the time that lax regulation and anything-goes banking laws were in the public interest.
And while it may now seem obvious that just the opposite was true, such a conclusion was beyond the capacity of a system that has institutionalized stupidity. It's as if two words have been coded deep in the system's reptilian brain stem: play dumb.
To change things on Smith Hill, the public first has to appreciate the importance of the General Assembly's code of stupidity. It makes corruption easy and gives members a ready alibi - "Hey, I didn't know anything about that."
And says Rep. Rodney Driver "Any problem we've got you can blame on this process."
When many bills come before Rhode Island's citizen legislature, it's the first time most of the members have seen or even heard of them. Full hearings are rare. There's no history, no analysis and no time to think.
Nevertheless, the majority - if the leadership tells it to - votes for the bills anyway. (Loyalty is also part of the code.) "Most members of the House have little or no idea what a bill says when they vote to approve it," says Driver. "You don't have to think at all. A pigeon could do my job."
As a result, Driver says the General Assembly does some "really stupid things."
That's the idea. And that's exactly why RISDIC's bankers and borrowers got everything they wanted so easily.
To dramatize his point, Driver, a mathematics professor at URI, likes to show a video from the session of April 12, 1988. On that day, Driver asked Rep. Joseph Casinelli a question about a bill Casinelli sponsored to change the amount of cash and readily marketable securities the state's credit unions would have to hold on their balance sheets.
The leadership said the bill would strengthen reserve requirements. But Driver actually read the bill and thought it would do just the opposite. He asked Casinelli, as the bill's sole sponsor, to explain.
Now the question was a little complicated. It required a basic understanding of banking and English grammar. But Casinelll was chairman of the House Corporations Committee and a member of the state Board of Bank Incorporation.
He just shrugged and gave Driver one of those "whaddya want from me" looks. The leadership intervened, restated its explanation and jammed the law through.
Not surprisingly, Driver was right. He knew it and, naturally, the management of the state's worst credit unions knew it. They quickly stripped their balance sheets of their cash reserves.
"The whole state got hurt by the '88 bill. It was a major contributory factor in the collapse," Driver said.
That's just one example. The General Assembly has played dumb and passed other bills: to permit RISDIC to insure loan and investment banks; to allow credit unions to make high-risk investments and for RISDIC to regulate itself.
"The people don't have any idea how bad it is," Driver said at a press conference this month. And it hasn't stopped. On the last day of the 1991 session, Driver said the General Assembly passed 122 bills "with our eyes closed" including two banking bills, 38 and 124 pages long. "These went by without anyone saying anything."
Now that's a stupid way to conduct business. But for anyone with money and brains who wants to get a special-interest bill through the General Assembly, the system is ideal.
With everyone playing dumb, it's not even necessary to explain the true intent of these bills. All you have to do is get to the leadership. That's the insidious beauty of this system.
And if things are going to change, the reformers will have to find a way to make it harder for the politicians to play dumb.