Rhode Island governor considering overhaul of agency that provided 38 Studios' loan

Rhode Island Governor Lincoln Chafee may restructure the government agency that provided the backing for 38 Studios' office in the state, according to a statement from the governor, reports Reuters.

Chafee's office recently commissioned a report on the Rhode Island Economic Development Corporation (RIEDC), which provided the original $75 million loan to Curt Schilling's 38 Studios in 2010. The internal study was performed by the Rhode Island Public Expenditure Council, an independent nonprofit research firm, and was published on Tuesday. It suggests that the RIEDC be revamped and that a new state office be created to supervise economic policy in the future.

In a statement on the report, Chafee called the 38 Studios situation a continuing "economic development crisis for the state of Rhode Island." Chafee's office has made repeated attempts to distance itself from the loan to 38 Studios, which was guaranteed by the RIEDC under former Governor Donald Carcieri, likely because the soured deal could have political ramifications for the current administration. Chafee already implemented a new $10 million limit on RIEDC loans, a policy that went into effect last year after he took office; the previous cap was set at $125 million.

38 Studios declared bankruptcy in early June after defaulting on a $1.125 million loan payment to the state in May. It also failed to pay its staff before laying off all its employees at its Rhode Island and Maryland offices. Follow our complete coverage here.