DENVER — Gov. Roy Romer declared Wednesday that Colorado has "a moral obligation" to bail out thousands of depositors who have $40 million frozen in a handful of faltering private banks.
"What bothers me is that a depositor who puts money in an industrial bank sometimes is not the most sophisticated investor," Romer told a press conference at the Capitol. " 'Let the buyer beware' does not apply in this instance."
Romer outlined a seven-point rescue plan that would have the state make up the multi-million-dollar difference to depositors once the banks and their private insurance fund have paid out all they can.
The Democratic governor suggested that one possible source of bailout money would be an estimated $9-million windfall the treasury expects to deposit next May from unclaimed or abandoned bank accounts across the state.
No Federal Insurance
Under an unclaimed properties law passed earlier this year, bank deposits are presumed abandoned if left idle for more than five years and if the owner ignores such notification by the bank.
Fourteen of the state's 89 industrial banks have been taken over by the state since September when it became clear that they would be unable to obtain federal insurance.
The industrials were backed by a private insurance fund that was supposed to guarantee deposits up to $40,000. But after two industrial bank failures early in 1987, the fund was found to have only $4 million in assets left to cover potential liabilities of $40 million.
Romer blamed Colorado's flat economy in part for the bank woes and said a review was under way to determine whether state agencies could have prevented the bank crisis.
The governor indicated that depositors might be able to retrieve some of their money by the end of the month. Banking Commissioner Richard Doby is to present a final plan of action to the governor and General Assembly by Dec. 21.
'No Legal Obligation'
Since coming under state possession, nine of the 14 troubled banks have filed for bankruptcy. Romer sent a letter to the presiding judge Wednesday urging him to dismiss the petitions, saying he feared the depositors would have to wait longer and would not necessarily be first in line for paybacks if the industrials get tied up in court.
"The depositors, not the owners or investors, should . . . be helped," Romer said.
He added that Colorado "has no legal obligation but I feel it does have a moral obligation" to depositors who may have erroneously felt the industrials were backed by the state since the state regulates banks and had required the industrials to establish the private insurance fund in 1973.
"We need to say to those depositors, 'We're not going to leave you out swinging in the wind,' " Romer said.