Word: ls
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Dates: during 1980-1989
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Customers at Maryland's privately insured S and Ls have been jittery since the Ohio crisis, withdrawing about $630 million in two months. But like Ohio's episode, which was touched off by the failure of Cincinnati's Home State Savings, Maryland's full-blown panic started with trouble at just one institution. The run began when press reports revealed that Old Court's president and part owner, Jeffrey Levitt, had stepped down under pressure from the insurance fund, which was worried about the thrift's sloppy management and overly rapid growth. In three years, Levitt had pushed the thrift...
...last week more than two dozen Ohio thrifts had reopened, backed now by the Federal Savings and Loan Insurance Corporation, a federal agency that guarantees deposits up to $100,000. The remaining privately insured S and Ls were allowing customers to withdraw up to $750. Depositors said they had confidence in their thrifts, and there was little sense of panic. Nonetheless, at least 200 jittery customers lined up to make withdrawals last Thursday from Cincinnati's Oakmont Savings and Loan, where there had been reports that some of the thrift's officers had illegally taken money from their accounts...
...Ohio experience could start a movement to force all banks and S and Ls in the U.S. to buy federal insurance. Says one congressional staffer: "Given the weakened condition of the thrift industry, another crisis is likely to happen unless there are changes made in the current system." Rhode Island Democrat Fernand St Germain, chairman of the House Banking Committee, has asked federal regulators to advise him on whether they believe private insurance is adequate...
...Germain sees the move toward financial deregulation in recent years as partly responsible for the new banking troubles. Before 1980, banks and S and Ls were subject to federal ceilings on the interest rates they could pay depositors. Now bankers have much more freedom to pay what they wish, and competition has pushed rates up. That in turn has led the S and Ls to make riskier investments to cover the handsome payouts. In the past, thrifts generally limited their loan business to home mortgages. Now many have plunged into higher-yielding but more dangerous ventures, ranging from office-building...
Many S and Ls in southern Ohio still adhere to the old-time philosophy of prudence and modest ambition held by the German immigrants who started the institutions a century ago. Home State was an exception. Largely through transactions with E.S.M., Home State's assets ballooned from $571 million in June 1983 to a precarious $1.4 billion at the end of 1984. Says John Zellars, chairman of the U.S. League of Savings Institutions: "Home State really made bad investments, and, basically, they were dealing with crooks. That is not the usual way S and Ls operate." The new Ohio legislation...